Q4 2020 Adecoagro SA Earnings Call

Good morning, ladies and gentlemen, and thank you for weighted.

At this time, we would like to welcome everyone to other Joy gross fourth quarter 2020 results conference call.

Today with US we have Mr. Mariano Bosch CEO Mrs.

Mr. Charlie Barros you CFO.

Mr. Wallach next yoga Aliano Investor Relations manager.

We would like to inform you that this is on is being reported in all participants will be on listen only mode. During the Companys presentation.

After the Companys remarks are completed there will be a question and answer section.

At that time further instructions will be given.

Any participant need assistance during this call. Please press star zero to reach the operator.

Before proceeding let me mention that forward looking statements are based on the beliefs and assumptions about the correct gross 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.

Other operating factors could also affect the future results of Atco agro and.

It 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, Thank you for joining other collateral for the quarter credit Research conference.

'twenty 'twenty wasn't as EBITDA year due to the low one impact of the COVID-19.

He said, but limit wasn't clear we immediately PPA safety measures to mitigate the event for at least golf being affected by Debbie Kaye.

And we win on non.

Those brands they've either.

Throughout our operations, we provide a safe environment for our employees and contractors implementing.

Safety measures on developing protocols that allows us to maintain our Dvds, 100% operations. It is because of this.

We have a team very good operational and financial results, even in such challenging times.

And once again.

We brew that being low cost producers on focusing on efficiencies definitively batesville.

You know, what if somebody external non energy business the impact of the pandemic costs debt decreasing the prices on demand for ethanol.

Starting in the second one is that our <unk>.

In light of these factors, we rapidly shifted our strategy to maximize sugar production.

We slowed down our crushing pace implement the debt reduction plan and revised our Capex plan.

Thanks for the bus sharp recovery started to emerge we accelerated our crushing base.

And finally concluded the year.

Seven 1 million tons for us.

For <unk> 3 million higher than during 2019.

Good day, one aspect of our Blackstone system East the high flexibility, we have two fleet from producing sugar to ethanol on bipolar.

Uh huh.

This allows us to triple the amount of sugar, we produce compared to 2019.

And to increase our relative production on anhydrous based on them to capture the premium price.

This is one of the features we took on a weekly basis get them tested changing on unstable environment.

Having the ability to change day to day in such a short video.

Constitutes a very important competitive advantage.

Having a sustained number but that's for mud is part of our DNA.

Thanks to Lisa we obtained one of the highest score.

On the debt or no. Other you brought on and benefitted from on additional cash generation on a full $3 million through the same zone Cys in 2020.

We are optimistic about the boat on consolidation and we will continue to increase the sustainability of our operations to keep on benefiting from a return on Sofia.

To conclude on our sugar and ethanol business on the cost of all these things I'm mentioning.

We ended up 'twenty 'twenty with a cash cost of seven nine cents per pound that these sales.

10% lower than the previous year.

Finally on Landa Omnichannel business our cash.

The EBITDA during the year, it was 50% higher year over year.

This is a clear growth of the consolidated zone up the five year plan investments, We May act at all our crops rice and ADB synergies.

The weather.

Our focus on efficiencies.

In 2020, we completed the how do we sell almost 1 billion tons of rights on rates.

Transporting our production across the provinces and reaching customers across the water.

We were able to achieve this on overtime.

Charity gala by the mandatory lockdown.

Okay.

People on the water can we leave alone site with public agencies.

We have once again, that's the pattern, we're seeing on Dvd's for right on some of our crops.

While soybean corn and peanuts on in the period of use definition.

And our Lady operations, we continue ramping up our industrial for CVD and achieving high productivity indicators, even our scout.

Great.

In terms of landscape the actually demand for funding on the Argentina allows us to fund that on a leash on on farm sales in December at a significant premium to the push button on white cliffs and depend on valuation as anticipated in our leases.

2020 marks it doesn't mean bump for us.

We became free Gaslog positive for the first time since we started our five year plan in 2017 generating over $50 million the expansion of our clustered in sugar and ethanol business based on intense of day Navidad ADT the acquisition of our peanuts on.

While our processing facilities.

The investment in our Reits business, both at the farm on iOS 11.

On the acquisition of debt to making processing facility.

Other parts of the investments we need during the past year.

They are all generating returns on invested capital in line or below our expectation on ranging from 20% to 100%.

The investment.

And our peanut processing facility to name. One example, babies sales back in less than one year.

Now that we set off on what.

Let me get more efficient on Thursday, <unk> day, ladies operations out in front of us.

And that's what our five year plan eating it by net status.

We are confident that cash flow generation, we continued to increase in the outstanding years. Moreover, commodity prices have been increasing our Athena will every day for 2021 and now what does that mean is.

Either way on structuring the loans debt.

All of these places us in a good position to distribute result, with our share for less.

On a few can see we have already started doing through our Dubai restaurant Lastly.

I would like to express my gratitude to all of our operational and management teams were very brown on the commitment shown during this difficult time of day.

Hadn't work and continued support I am convinced that we have the right people and that we are following the right strategy to generate good returns on value for our existing channel.

As always we need to remain focused on being low cost producers enhancing our efficiency and taking care of our people now I will let Charlie walk you through the numbers of the year.

Thank you Mariano good morning, everyone, let's start on page for with a brief analysis on the range of my photos for them.

As seen on the adult charge range in our cluster during the fourth quarter of 2020 were $10, 7% below net 10 year average, but 12, 8% higher compared to the fourth quarter of 2019.

For us where are distributed throughout the quarter.

What's especially concentrated towards the end of the December.

Resulting interruptions in our crushing activities as can be seen in the following slides.

I would like to briefly comment on the weather in the center South region of Brazil.

The region, which accounts for approximately 85% on Brazil sugarcane production.

Spirits to dry weather for a prolonged period of time last year. This for Smiths to shut down operations early than usual as they didn't have enough cane to crush.

For the same reason the beginning of this year, how the C zone will probably be delayed.

Starting in a longer than anticipated due to harvest theory. It is.

It's worth highlighting that.

And we will continue to gross gain year round and produce both sugar and ethanol day into harvest period.

This is so because we are based in a region that has a different weather dynamic and because we operate under a continued harvesting model.

Net continue with slide five.

I would like to discuss our sugarcane crushing.

During the fourth quarter of 2020, a total of $2 5 million tons of sugarcane crushed for.

41% or 700000 tons higher on the same period of last year. Despite the reduction in effective milling days.

Indeed.

To make up for the slowdown in crushing activities during the second border on in order to profit from higher prices, we decided to accelerate the meeting operations.

This was evidenced by the astonishing 57, 6% increase in meeting for date.

Needless to say it was the greater cane availability, coupled with enhanced efficiencies on the industry level that made it possible.

On a year to day basis, a total of $11 1 million tons of sugarcane crushed.

This represents an increase of two focused sales compared to the same period of last year.

Again this speaks for the highly efficient on coordinated work during the second half of the year.

Please jump to page six where I would like to walk you through our agricultural credit TBD.

During the quarter sure can gears reached 82 tons per hectare.

23% higher compared to the fourth quarter of 2019.

The year over year GAAP fully explained by the negative impact of the adverse weather conditions on the 2019 Skus as most of the harvest day area was came below optimal growth stage.

The RF content was 137 kilos per ton.

In the fourth quarter of 2020 on 132 kilograms per tonne in 2025, 5% and one 1% lower compared to the same period of last year.

Again, the reason for the decrease is explained by the dry weather conditions in 2019, which led to higher Trs content.

The combination of these two effects resulted in Trs production per hectare of 11 three times in the fourth quarter of 2020.

$13, 6% higher year over year.

Year to date, yes reached 79 tons per hectare and Trs content on 132 kilograms per ton, resulting in net Trs production per hectare of 10 for tons, three 5% higher year over year.

Let's move ahead to slide seven where I would like to discuss our production mix.

As already said in light of the improved outlook on prices on in order to take advantage of the favorable weather in Cana availability.

Our strategy during the quarter was to maximize crushing.

As you can see the dominant chart during the fourth quarter of 2020 sure traded at a premium of 14, 3% and three 9% to hydrous and anhydrous ethanol, which traded at $12.05 per pound on 14 cents per pound respectively.

As a result of our efforts were focused on maximizing sugar.

With the highest margin on contribution indeed, the operating data will show a kitchen at full capacity throughout the quarter diverting as much as 50% of Drs to sugar production growth.

Two 6% during the same period of last year.

On a full year basis, we maximize sugar production in a 44% compared to 15% unit 2019, Despite our first quarter of full ethanol maximization prior to the pandemic.

I would like to insist that this high degree of flexibility constitutes one of our most important competitive advantages since it allow us to make more efficient use of our fixed assets and sales of product with the highest margin and contribution.

In terms of ethanol during the quarter, we diverted 50% of Trs to the ethanol distillery compared to 94% during the same period of last year on our strategy was to maximize these product.

Year to date sure accounted for 36, 9% of total EBITDA generation in the sugar ethanol and energy business, considering other operating income for items higher compared to 2019.

Again this is a clear evidence of our capacity to shift production from one product to the other.

Let's please turn to slide eight where I would like to discuss quarterly results.

As you can see on the top left chart ethanol sales volumes decreased by 36, 1% year over year.

This is fully explained by our strategy to maximize sugar production due to the lagging impact of the pandemic on ethanol prices and demand.

In particular during the first semester for the year.

During 2020, hydrous and anhydrous ethanol traded on average on sugar equivalent in practice of 12 cents per pound and 13, one cents per pound.

Six 7% discount on one 3% premium to sugar respectively.

Average selling prices for ethanol, where higher measured in reality, but lower in U S dollars standing at $13.02 per pound issue, an equivalent representing a 36, 1% year over year reduction.

On account of the lower selling volumes on lower average prices in U S dollars net ethanol sales during the year amounted to $180 6 million for.

46 focus on lower year over year.

In spite of the lower results I would like to mention once again that ethanol prices experienced a recovery throughout the second half of the year due to <unk>.

Higher gasoline prices.

Increasing fuel demand.

And lower supply, thus building a positive scenario for the upcoming months.

In the case of energy year to date net sales amounted to $36 9 million, marking a 31, 3% decrease compared to 2019, driven by a five 3% decrease in volume on at 27, 5% decrease in average selling prices measured.

In U S dollars.

Net sales of sugar increased by 72, 7% in 2020 compared to the previous year, reaching a $167 8 million.

Sales volumes increased by 89, 9% year over year led by an increase in production mix and volume, which fully offset the nine 1% decrease in average selling price is measured in U S dollars. Despite an increase in prices measured in reais.

Although sure is traded in U S dollars the depreciation of the Brazilian real does have an impact on prices due to the fact that our functional currency realities on our reporting currency in U S. Dollars. In addition, I would like to comment that during 2020, we started exporting a decent guide.

Organic sugar produced at our momentum certification is required by the European market on these fully granted after having produce organic sugar for a period of three years.

We successfully exported approximately 5000 tons of organic sugar on an average price of 25 cents per pound, capturing a significant premium over BHP sugar and plan on doubling the exported figure in 2021.

In this way, we don't only have a highly efficient cluster model in place, but we also continue to add value to them.

Let's move to slide nine where I would like to explain our total cost of production.

Total cost of production depicts on a cash basis, how much it costs us to produce one pound of sugar and ethanol in sugar equivalent.

Montana is capex is included in the calculation since it's a recurring investment necessary to maintain the productivity of the sugarcane plantation.

As we are calculating <unk> on cost energy is deemed by a byproduct and thus deducted from total costs.

As for the tax recovery line. It includes the Ics tax incentive that the state of Mato Grosso soon granted us until 'twenty two.

As shown in the table total cash cost in 2020 marked at 12, 7% reduction on a per unit basis, reaching seven nine cents per pound of share equivalents.

This increase was explained by a 29% reduction in total production costs driven by.

Higher crushing volume, which allowed us to dilute fixed costs, coupled with the year over year depreciation of the Brazilian real which further contributed to reduce unit costs measured in U S dollars.

Additionally, enhanced agricultural efficiencies.

Lower industrial costs due to reduced third party services and temporary suspension of wood chips for Genesis.

I also had a positive impact on production costs.

These positive effects were partially offset by the higher cost of third party cane, both as a result of higher purchased volumes and higher concept on our prices.

On the same time, the maximization of sugar production led to an increase in SG&A expenses as well as a reduction in fiscal <unk> reimbursements 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 fourth quarter of 2020 was $80 3 million.

$25 2 million or 45, 6% higher compared to the fourth quarter of 2019.

This increase was mostly explained by the $19 9 million hydro results derived from the mark to market of our biological assets.

Actually offset by a loss there.

Cash from the Mark to market of our commodity hedge position and an increase in SG&A on account of higher freight and falling costs due to higher sugar sales on a full year basis results were impacted by the effects of the pandemic. However, adjusted EBITDA amounted to.

$253 1 million in.

In line with last year.

Now I'd like to move on.

For the farming business. Please direct your attention to slide 12.

As of to date on the go out a finished its planting activities for the 2000 2021 harvest year.

Planted 262000 hectares, 10% higher than the previous harvest season.

This increase is expected to come primarily from a greater leased area.

So far <unk>.

Have been adequate in average however, we continue to closely monitor water requirements as we are going through the critical phase in the development of most of the crops, let's move to page 13, where I would like to walk you through the financial performance of our farming and land transformation businesses.

In 2020, adjusted EBITDA on a farming and land transformation businesses reached $107 7 million.

$35 9 million or 51% higher year over year.

The decrease in financial performance is mostly explained by the $28 $3 million higher <unk> generated by the farming business, although the non transformation business contributed with a $7 6 million increased following the completion of two land sales during 2020.

The growth business generating on adjusted EBITDA of $35 $7 million during the 2020.

39, 1% or 10 million higher compared to 2019. This is mainly explained by.

Up $17 million gain in the mark to market of our biological asset on our grain inventory on <unk>.

On sequence of the increase in commodity prices the higher planted area on the increasing in years for most of our crops.

And by cost dilution U S dollars on account of enhanced efficiencies on the depreciation of the Argentine peso. These results were partially offset by a $10 5 million loss in the mark to market of our commodity hedge position.

The rice business accounted for an increase in adjusted EBITDA of 67, 8% or $13 7 million compared to the previous year, reaching $34 1 million in 2020.

This was mostly driven by a $6 3 million gain in the mark to market of other biologic assets explained by the increase in commodity prices, coupled with an increase in area in years as a result of recent investments, which enhanced productivity and a $6 9 million reduction in selling expenses due to our.

4% reduction in export taxes.

On the cost dilution effect as a result on the depreciation on the Argentine peso during 2020 and data business was responsible for an increase in adjusted EBITDA of 21, 3% or $3 8 million compared to last year totaling $18 2 million during 2020.

This increase was driven by our enhanced efficiencies of the farm and maybe just to level led by our continuous focus on increasing productivity in every stage of our value chain.

Our production flexibility, which enabled us to capture the increasing demand in the domestic market driven the COVID-19 pandemic.

And on increasing gross sales thanks to a 58, 7% increase in sales volumes, partially due to the three months GAAP in 2019 industrial operations. This increase was partially offset by higher costs and expenses on account of the larger volume.

Let's now turn to page 16, which shows the evolution of other gliders consolidated figures for the year.

I would like to highlight the fact that despite all of the challenges we managed to outperform both.

From an operational and financial perspective.

Consolidated adjusted EBITDA totaled 342 million 12, 1% or $37 million year over year.

As previously explained the good results from farming and land transformation explained the increase on the same time 2020 marked a milestone for the company as it was the first year that we generated positive free cash flow following the initiation of our five year plan back in 2017.

Turning now to slide 16 to take a look at our net debt position as you may see in the volume net charge, our net debt as of December 31st 2020 reached 635 million 33 million or for 6% lower than the previous quarter.

Driven by a $122 7 million increase in cash and equivalents, which fully offset the higher gross debt.

Net cash and equivalents was mainly explained by our strategy to raise long term debt during the second half of the year with the idea to cancel shorten debt during the first semester of 2021.

This will result in a significant improvement in our debt profile.

Substantially reducing capital payments for the year.

On a year over year basis net debt in the first quarter of 2020 was six 4% or $43 2 million lower compared to the fourth quarter of 2019 in spite of gross debt being flat year over year.

This is explained by the $15, 8% higher in cash and equivalents driven by a positive free cash flow. During the last 12 months on by the short term working capital lines will raise throughout the year as part of our risk management program for <unk>.

Fourth quarter of 2019 in turn reflects the inflow from the issuance of the crowd bond in Brazil that took place by 2019 year and.

We believe that our balance sheet is in <unk>.

Healthy position not only based on the adequate overall debt levels, but also on the term of our indebtedness with approximately 78%, having a long term panel.

At December 31st for Tony Journey, both our net debt ratio as well as our liquidity ratio improved compared to the previous quarter. Indeed, our net debt ratio reached 186 times.

Pinpoint 9% lower than the third quarter of 2020, and 16 focus on lower year over year.

On the same time, our liquidity ratio, which is calculated as cash and equivalents plus marketable inventories divided by short term debt reached 262 times compared to 149 during the second quarter.

This ratio shows the fully get passage of the company to Rebase shorten debt with cash balance without racing extra on new capital. Thank you very much for your time, we are now open to questions.

Thank you the floor is now open for questions. Thank.

If you have a question. Please press star one on your Touchtone phone or on.

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Hold while we poll for questions.

Today's first question comes from Pedro Suarez with BTG Pactual. Please go ahead.

Yes.

As more and more of their money on on calls.

I have a couple of questions here on the sugar and ethanol business and so on other one regarding farmland.

The first one.

With the with the end of the debt.

Price investment cycle that you guys deliver.

For the passengers.

Should we expect for the caution levels for for this year actually gets dumped on one on one on awards, that's down 22 crops.

It'd be helpful. Jim Harbaugh on.

Color on that issue, we could expect which includes alright and next holiday and also in <unk>.

Already on the.

Getting sugar market.

What's the size of this market for you guys.

What are what should we expect as well in terms of how much you could capture.

For the organic segment would be nice to hear.

One.

Regarding farmland from let's say now with this recent spike, especially north of commodities.

Could we see or expect.

To just sell more land in terms for district civil right.

Many of US here is that this happened also when not when inflation picks up.

Margin change as was the case. So if you could also touch base a little bit on this would be would be helpful to us. Thank you.

Hi, thank.

Thank you very much for your question.

On the other day and sugar and ethanol.

The space.

I will ask <unk> to answer your question on then I can complement.

Way to go through the farmland question.

But an adult do you want to once a day that I'll say.

Question.

Okay. Thank you for business. So we started towards your two question.

Producing organic sugar immuno for for years.

During the first year doesn't have exports were going to sugar.

Three years.

Other than of production to start 7% will be on them.

Sure.

Markets.

We think with whom I had the right location to do these projects because of the location of remote which is very close.

The market and also due to the agenda on exports.

Also been rather than moving very well defined it so what we've seen for the conditions for producers to produce gun sugar debt is very good day.

Many of our projects is about 3000 tons, which we will be able to produce 14000.

Sure.

So on top sugar mill for the intruder.

We don't think that we can grow margin debt because in this particular area.

We have been able to move all the byproducts net would produce.

For two thirds of fly ash so Mr growth third we have to acquire Oregon fertilizer from other areas.

It would make the sugarcane.

Cost of debt to produce sugarcane very high so we think that despite that we we think it's appropriate for our model.

The size of the market.

The global market is about.

<unk> hundred thousand bonds of sugar and so we take that mall market, it's a niche.

The goal of these markets is above 10%.

And regarding the.

Other gross about sugar and ethanol.

I didn't understand it very well.

I.

Appreciate it.

Sure it's actually regarding the correction levels expected for for this next harvest from here should we expect you guys to push more came on.

So for the coming year.

On the core engineers, we expect two gross or 110% more than last year.

Charlie mentioned before delay other than multiples and so that's very good in the second line semester, we have very good range.

Our range and key points of last year.

So for example, generally have margins 400 million EBIT, plus offering which was very good and Thats why we are crushing on loyalty. This first.

Quarter.

That is on the price.

Regarding ethanol net.

Hi.

We expect to reach the $12 5 million tons of sugarcane, which is our goal in all of our funds your line.

In 2010.

Three.

I think the good news is it doesn't have a resident needs all of the land that we need. So it was just a mineral flame involvement and to be ready from two 2%.

Yes.

Thank you Ryan.

And then pay that off to answer.

Question about debt the farmland I would tell you that scene.

September of last year or since the end of last year.

Net debt was on increase in the demand of land in but I've seen you to weigh on Argentina. So that it was more of a demand also for our own farmland.

On the you know on US we have been explaining many times.

Selling and buying land is on the leap <unk> market, where we find the right buyer Donnie.

Thanks.

Time to find that right.

For now we're already transformed farms. So that's what we these day back in December we do expect to continue totally day.

Within the same level, but on a.

That would be the day.

And on answer to your question.

Okay.

Pretty clear. Thank you. Thank you hang up as well.

Our next question today comes from Lucas Ferrara with J P. Morgan. Please go ahead.

Hi, guys. Good morning, two questions regarding capital allocation. The first ones are quite simple one if you can remind us.

The Capex budget for this year, if it was revised up or not because of the outlook on pricing.

Second question is since you now finished.

The growth.

Youll growth cycle.

Probably we will be paying more dividends.

Doing buybacks, but wanted to think about.

Strategically thinking, let's say couple of years from now.

What are the growth opportunities do you foresee for the company would you still be investing in Argentina, do you see opportunities seen in acquisitions or expansion Capex in Argentina, It's yes.

Where exactly niche segment, which market.

The same question for Brazil.

What are the growth plan, our perspectives for the operations in Brazil would you consider M&A on your organic growth.

Can you discuss this with us a little bit more thank you.

I look at thank you for for you.

Question on.

Yes.

I wouldn't try to on set of first on NAV, but all the way and then we can get into more.

More of these days.

I would like to include all of the different parts of your questions.

And I would like to point to.

To point out day as.

As you mentioned.

Cash flow positive that ceased to MP 17 debt is Watson there anymore.

So.

The important point here is debt.

On the investments that we are currently generating very attractive returns.

And because of this consolidation.

Consolidated Sean.

Okay.

Generating this free cash flow positive.

This marks the beginning of the path, where we start to generate cash in a structural way.

Actual results on a significant increase in our cash generation in the upcoming years.

In addition, our debt level.

<unk> share in the long term on reaching the other is like limit.

This means.

That we will have enough cash for both the day to yield results with our shareholders and.

To create value by enhancing our operations.

Our first priority is to distribute that rely on it.

Portion of this cash with our shareholders in.

In fact, we have already started totally vs.

For all of that.

Only during the first months of 2021 we have already reported chase close to 1 million share.

And we are also analyzing attractive opportunities both in the farming on in the sugar business.

Asking specifically.

All of this opportunity.

Alright.

Sure Jason.

J S well with our current operations.

And have the potential to make them more efficient as a whole operations and.

All of these things that we are analyzing also.

About 30%.

So that's basically how we are thinking about.

The.

This capital allocation question that you were asking on.

And specifically in terms of the Capex of 21 that you were asking.

I would for the CNS without eating the same lines that what's happened in 'twenty 'twenty because in 2021 would it be like some of the Capex that we would've made shining we delayed some of this.

<unk> five year plan Capex that day, we had already planned.

Okay.

Maybe just a quick follow up.

This potential high return projects you're talking about.

Yeah.

What's the size of those I mean could we expect something like a major like cash.

Can you just can increase for you.

Your capex going forward or do you see those at more.

Marginal.

My point is do you see any large capex.

Big topics liquidity low.

Eric your.

Your your dividend payments in the next few years.

That would be my my question, but no.

The important thing is what they look Jeff manage on a non I also mentioned.

In day transaction is that our priority is to distribute his share caused debt. So including that is that we are open for different projects with attractive I get us on this project guidance include.

M&A or can include organic growth or cutting include changing one machine that makes us a much smaller but also so that the small investment.

Specifically I got out of it because of its commodity <unk>.

50% or 70%.

No.

Those are all the different projects that we can do but always with this idea that we have out but are you do you see that is distributing which had less also so thats. How we are approaching on all day thinking I'll take capital allocation.

So it'll be more specific I don't see a huge capex coming on line.

Yes.

Got it no that's fair for me to thank you very much.

And on the cement and Capex also take time because.

They imply improving on the operations on the day to day, so all things that cannot be done from one day to run on it.

Thank you Sir today's next question comes from Rodrigo Almeida with Santander. Please go ahead.

Hi, good morning money on it'll cognizant team and congratulations on the impressive results.

Okay, just one clarification on pickup explain as well.

My first question here.

Related to the sugar net flow business and.

And more specifically to the expansion in harvest scenario.

I think he had not already mentioned debt.

Go ahead and do it.

The area that you need, but I wanted to understand a little bit more on the pace of planting and harvesting on these areas for 2023.

Just so we can understand a little bit better than sugarcane availability.

Year by year.

And also just out of curiosity here, they're higher sugar soy corn prices is there any way that they lease expenses could increase or do you have everything very well say wrapped up so that these changes in prices.

Back to your contracts and just also out of curiosity. If you were to leave more land right now.

Do you think you would have a higher cost than you than you did before just because of the higher price and just started for you over here and then the second topic here that I wanted to touch on there'll be there's only buyback program.

As far as I remember the program was extended into September of last year, but then maybe I missed something but the program is now.

Just wanted to understand once you win the program is going to be valid and what's the size of the program that is active right now.

For my questions. Thank you.

I'm on a stat from from the end of your question Rodrigo Thank you for them.

<unk>.

On the buyback program the buyback program.

Bye for center, what has to be NAV team by the board of that nice renewal day every year on.

If we reach that level that household.

Open by the La Z Boy did they teach on debt.

Always can be taken today what is on.

<unk> five percentage prana.

Then going to your question on are all debt costs and costs on leasing the land on what do you see increasing in commodity price.

Yes. It is clear that is on increasing costs that the increase in net revenues because of this increasing price is higher than the increase of cost. So the margins improved even with these seem to be <unk> of course, we add on working with that we have.

Sales or added part of net gain that <unk> been leased for two years for two cycles that that means for 10 years. So that is not on okay, but the other portion of the leases that they knew this year would that when we renew those sales.

Pete.

Yeah.

Small increase it and that's part of day negotiation that we continue to do every day and that's part of what we do but day.

If we take your question.

What just seeing on.

Yes.

It's part of our reality, but at the end they modify itself plus other.

Debt at a weighted Z say high yet.

And finally on the expansion of day, how do we add yes, I couldnt understand exactly well.

Specifically on the bottoming Atlanta for automation that is an increase of 10% when increasing the more profitable could offset in this case at <unk>.

Flour peanut.

On Andrei.

But.

On the issue asking question on I Couldnt understand exactly what was your question we have already leased on the land to continue to finalize the ethane volume.

2 million thoughts I'll start out asking that we will reach in 2020 do that they're not on <unk>.

Yes.

I Couldnt understand exactly what was it that part of your question.

Yes.

For the pace of the planting and harvesting you know how much.

We can expect more sugarcane availability, it's impossible for any 122, and then we reached the before.

Capacity I, just don't understand that.

Year by year piece.

So you want to answer more specifically.

Of course on.

On the way it depends on the climate they'll for every year on that <unk> seen.

Changing but we have a word on project John that the weekly in 5% to 10% growth every year.

Yes.

With two nuclear plants.

<unk> thousand inhibitors of the expansion.

Planting.

And we think that we will increase.

10% compared to less senior debt on.

Other 10% compared to this year and then finally in 2023 new Leach.

The $12 5 million tons in the cluster and will have to add the $1 2 million tons on.

To get the total crushing capacity.

Okay. That's perfect that's very good color. Thank.

Thank you.

Thank you Neil.

And our next question today comes from Sam pause surcharge.

Sure Sean.

HSBC. Please go ahead.

Hi, good morning, Thanks for taking up my question.

And remember and one offs GAAP presentation, a couple of years ago, you mentioned that your EBITDA could reach well about USD $400 million.

By the end of your five year Capex plan.

I know that that's a bit data presentation, but I'm just wondering.

To refresh dose estimates to reflect the current commodity pricing thesis, which are obviously much higher than it was at the time of presentation. Do you think it will still be able to generate EBITDA of about $400 million in 2021 or is that any other factor.

That is necessary to achieving that number.

Basically trying to understand the possible scenarios for 2021 earnings and underlying drivers.

Yes.

Thank you for Santos for your question.

Thank you for participating in the call.

Of course, we don't need yeah.

The average.

But clearly as you were making your calculations.

Alkylation suites.

Crashing volumes on what we are.

Gordon will be producing on.

Subject to our lease climatic events that would it be.

Pat.

We've gotten great share.

Slamming shut dumping of all day everyday nervous that day.

Something that you've gotten all your own calculation on site and work with them on that.

And it's clear that day or.

Something that we cannot take on EBITDA.

And that's about it.

That.

Easily reach.

Yeah.

Thank you I have another question.

So if you look at ethanol prices in Brazil that has seen a strong rally in.

For probably 2021.

So.

Assuming this momentum will continue do you think it will be producing more ethanol instead of sugar.

For 2021, so if you can give us some numbers on the production mix between sugar and ethanol debt will be helpful.

Yes, that's how next day then question.

Today.

This exactly on that in this exact moment.

We are again maximizing ethanol, but that's something that we are changing every week. So that's a great competitive advantage that we have as a company and thats a great flexibility that we have so every week. We know what do you see that we are going to be maximizing so we'd been maximizing share.

For many months now that cash.

Jeff changed and that could change next week or that's a one off day to day.

Vantages of our whole production system, not only the assets, but the whole production on seat them on the other important thing I would like to point out. Your question on is that we are currently producing ethanol that in January.

Nobody is but are you seeing ethanol today, but because of our continuous harvest on our model of how do I think on the year round. In this moment, we are taking advantage of the session price yourself.

Sure.

Okay.

Thank you and my last question is on your yield expectation in your crop business since you're nearing hardware.

For most of the crops can you give some sense on the potential yield impact due to the dry weather in Argentina.

Okay. Good.

Good question for the color sugarcane operations, we added non excellent.

On the debt himself.

Net debt or where there has been a relative.

We believe the right BDO for the center South region, we adding them up I would also as for the region and we ought to wait then excellent sugarcane plantation that Esa for their cultural Nf L. B.

And then Florida.

Total bottoming.

In Argentina and Uruguay.

That is being that IP deals in the last day of 15 days.

Yes.

Soybean corn on.

On peanuts are in the middle East.

Yield definition I would say that we have already done a portion, but we are still subject to climatic events underneath this.

This like BDO Scott continue on an auto data you still really deal the dose for the good ups, but then we have day.

It could also like rice on sunflower that are important for us today.

Having a very good yields.

Yeah.

In this.

And adeel already in the situation of <unk>.

In this slide might be situations and we are in the middle all day.

They'll sell two crops that are yielding pretty well on some way above our projections.

So that bulk sale out there.

Yes.

The amount of dividend growth that they how we.

How we minimize our risk.

Cost of having all these different crops on.

Climatic production.

Regions.

Thank you that's helpful.

And ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Mr. Bosch for closing remarks.

Yeah.

Okay.

I would like to use this opportunity to right at 892.

All our employees.

Correct us on stage.

They call debt for their hard work and commitment during peak.

<unk>.

2020 was a very difficult year.

Adjusted full of challenges that debt is the limit sell photo that mutation on debility again.

Expected dividend.

However, our investment.

On a motion to efficiency in each process I could answer differently.

Lines of businesses.

On our low cost production Marlin has proven us right one more time.

We closed the year with attractive returns in every segment, resulting in strong consolidated fee.

But the challenges are not over yet.

2021 is already showing signs of difficulty that we shall have to overcome.

We are confident that we have the right people on strategy to continue generating value for our shareholders on obtaining.

Being proactive with us.

Thank you very much on for you in our upcoming events.

Thank you. This concludes today's conference call you May now disconnect your lines and have a wonderful day.