Q4 2021 Adecoagro SA Earnings Call
Good morning, ladies and gentlemen, and thank you for waiting.
At this time, we would like to welcome everyone to Alexandra was fourth quarter 2021 results conference call.
Because those we have Mr. Mariano Bosch CEO , there was a short LIBOR or as you as CFO .
We would like to inform you that this event is being recorded.
All participants will be in listen only mode during the company's presentation.
After the company's remarks are completed there will be a question answer session.
At that time further instructions will be given.
If any of our disciplined assistance during this call. Please first star zero to reach the operator.
Before proceeding let me mention that forward looking statements are based on the beliefs and assumptions and somebody who I heard 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 added color I agree.
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 be I'll begin.
Again the conference good morning.
Thank you for joining I think bothered us 2021 fourth quarter pre tax confidence.
Once again in 2021, the company has delivered a strong operational and financial results.
As you may have seen in our report.
Nonetheless, we made record pace in excess of $1 billion less.
Almost $440 million in adjusted EBITDA.
And generated over $150 million in adjusted free cash flow from operations.
Also as anticipated throughout the year, we distribute the part of that research generated back into 'twenty. So what does he have cordless be oh, what she had a buyback program.
During 2021 with reported Qi explained to me don't see ads more than 5% of the equity of the company.
In 2022 as part of our distribution policy.
We would at least <unk> 75 million Donuts Gene D. V. Then.
And continued reported you're seeing and then what.
Have I got through all of them.
Now I would like to leave you some highlights on the resets of the different business segments.
You know what farming business. During 2021, we produced over 1 million tons of today that weak conditions and shipped two different customers across the award.
You know what do they do operation, we reached a record high production of halfway media lead their self roaming but to date that.
That we process you know what don't facility to produce high quality value added products, which out of the montney, both the domestic and export markets.
You know, what a sugar ethanol and energy business, we achieved crushing volumes in line with the previous year.
The high degree of flexibility, we have you know what it means to produce the product with the highest modest contribution.
The strategic decision to mine they know what our hedging levels slow allowed us to maximize returns.
Okay.
Our sustained high pressure mud includes recycling of by products like the concentration of vignettes that is transformed into first he likes that are replacing approximately 35% of our needs.
This had an important impact in 2021 to meet the eight the overall decrease in production costs.
And we expect that such benefit will be much more relevant during 2022 .
We are.
We are already seeing a lack of potash verde digesting, but I C.
In defense, our sustainable production model that will provide for a more than 95% of our potash requirements every year.
We are strongly committed to improving the efficiency and sustainability of our operations.
As you might remember two years ago, I think while it'll became the first company to commercialize cut alone creates under that I know of your Florida.
And this year, we became the first company to be certified to issue natural gas certificate.
We are proud of the work on these fronts.
Being able to monetize our sustain that production practices.
In the case of that I know of you throw at them, we would produce one media savvy yours, we tend the current price of $20 per city, you will generate an additional research off.
$20 million.
Environment, Social Angola, Vanessa awareness have always been part of our DNA.
During 2021, we formally created and ESG Committee that will focus on the development of all these aspects as part of the company's overall strategy.
With regards to the current market outlook.
We already know Nixon and positioned to benefit from the higher prices of all the products that we produce.
Our how do I see sunny sudden that away.
The development of our crops are looking well.
At the same time more than 70% of this year's production remains unhedged.
And 100% of the inputs have been poorer chase and applied.
In addition.
In view of it but they just had a Scottish deal fee boots, we have secured more than 50% of what it means for next season.
As part of our strategy to become more efficiency and enhance our rice operation.
We encountered a very attractive opportunity to enter into the unit volume price production.
Country that east historical reference in the production of high quality rice.
We signed an agreement to pull to chase the rates operations off beat dead at all.
The transaction is expected to generate irr's above 30%.
And over a 10 million dollar contribution to our adjusted EBITDA.
To conclude.
I want to reiterate my gratitude to all our employees contractors and stakeholders for their hard work and commitment.
I am confident in the team we have.
And the company, we beat which has proven great resiliency and capacity to generate good returns.
Now I will let Charlie walk you through the numbers of the year.
Thank you Mariano good morning, everyone, let's start on page four with a brief analysis from the rains in Mato Grosso soon.
As seen on the top day, Bruce raised Augusta during the fourth quarter of 2021 were four 3% lower than during the same period of last year.
And $15, 6% below the 10 year average.
After a very humid month of October starting in November range in our region were lower than the average for this time of the year.
One thing now that your March rains have returned to average levels favoring the recovery of our sugarcane plantation.
As we had anticipated yeah diverse weather conditions that impacted Brazil's main productive areas throughout the year.
Caused a reduction in sugarcane availability towards year end, resulting in an early start of harvest season for all players in Brazil is true in our industry.
Thus expectations for 2021 and 'twenty two season point of total sugarcane production of 525 million.
In theory to the 608 million tons in the previous harvest year.
Evidently the reduction is a guy generated a positive impact in the prices of sugar and ethanol, which we weren't able to capture thanks to our production flexibility and to our hedging strategy.
Before turning to the following slide I would like to briefly comment on our expectation going forward.
Although current water conditions in our cluster very good we foresee below average agricultural productivity indicators during the first semester of the year, even the lagging impact of twenty-two nuanced adverse weather.
Nevertheless, our recovery in productivity towards the second half along with strong prices should continue to drive solid results. We are in a good position to keep on capturing the increasing prices are 76% of our expected to our production and 100% of ethanol production related to that 'twenty two 'twenty.
The campaign remain unhedged.
Now, let's continue with slide five where I would like to discuss our sugarcane crushing strategy.
And the last quarter of 2021, our crushing volume decreased by 54% year over year due to both weaker agricultural productivity indicators and lower sugarcane availability.
The other was explained by the fact that during the third quarter of 2021, we accelerating harvesting activities as anticipating area was critical to minimize the impact of the frost.
<unk> and validation.
Therefore, despite having a continued how this model in place by the beginning of December 2021, we entered into the into how the spirit, we expect to resume operations in March 2020 to making this a shorting to harvest period compared to other players.
On an annual basis crushing volume reached $10 9 million tons, marking a slight decrease of one 5% compared to 2020, even though our retention of our productivity indicators presented a decrease of approximately 15%.
Despite the challenges presented by the weather during 2021 to mitigate the damage we accelerated our harvesting pace until.
Anticipated the purchase of <unk>.
Five two line harvesters, and 319 harvesters and we're able to enter into 15, 5% more area. Thanks to our ongoing strategy of expanding our sugarcane plantation.
Please jump to page six where I would like to walk you through our agricultural productivity during the fourth quarter of 2021 years were down 24% compared with same period of last year, reaching 65 tons per hectare. Moreover, Trs per ton decreased 12, 2% year over year to 100.
<unk> 20 kilograms per ton.
Combined effect in years and Trs.
Content, resulting in Trs production per hectare of seven nine tons, marking a 31% reduction year over year.
The lower than expected agricultural productivity indicators were fully explained by the adverse weather conditions as most of the harvested area was came below optimal growth stage.
Looking at the full year the year over year reduction of 13, 3% as European years, and 15, 7% in Trs per Hector is fully explained by both the third and fourth quarter dynamics.
The decrease in agricultural productivity indicators was almost fully offset by a 15, 5% increase in harvest EBITDA area as mentioned before.
Let's move ahead to slide seven where I would like to discuss our production mix.
Both hydrous and anhydrous ethanol traded at an average price of 22, and 22.2 cents per pound sugar equivalent during the fourth quarter, marking a three 8% and 14% premium to sugar respectively.
Worth highlighting that we had the flexibility to increase ethanol production the product that was offering a premium as we remained at the low end of the of our sugar hedged throughout 2021, and thus had no volumes committed.
As a result, we diverted 93% of the Trs to ethanol to profit from higher relative prices during the fourth quarter.
Out of our total net production, 64% was in hydrous ethanol compared to 40% during the same period of last year.
This was possible. Thanks to the recent incorporation of our molecular received U V NEMA, which increased our deferred recent capacity 50%.
Nevertheless, total production of both ethanol and ensure slower compared to the fourth quarter of 2020 due to lower crushing even though this was more than offset by higher prices.
Production mix for the full year fever, and ethanol, which we diverted 62% of Trs compared to 56% the previous year.
Thus audience produced for sugar decreased 15, 5% on a year over year basis, whereas ethanol volumes increased by six 5% compared to 2020.
And hydro's ethanol during the year amounted to 45% of total ethanol production.
Tier 237% during the same period of last year.
In 2020 , one we maximize sugar production during the first quarter to benefit from higher relative prices and switched to ethanol during the rest of the year.
The opposite was observed in 2020, when we maximize ethanol during the first quarter, then switched to sugar ethanol prices planted in light of the pandemic went back to maximizing ethanol in the third quarter, and then returned to sugar maximization of the fourth quarter. This high degree of flexibility constitutes one of our most important competitive edge.
Bandages since it allows us to make a more efficient use of our fixed assets and profit from higher relative prices.
In 2021 ethanol accounted for 62, 2% of total adjusted EBITDA generation in the sugar ethanol and energy business, considering other operating income while sugar accounted for 29, 8%.
Please turn to slide eight.
So I would like to comment on our energy production strategy.
You know, Brazil synergy matrix is heavily reliant on hydroelectric energy due to the prolonged period of very well in the center South region of Brazil. The average level of water in reserve was for 'twenty 'twenty. One ended 33, 3% lower compared to last year.
Thus average spot prices increased from 117 <unk> per megawatt hour in 2020 to 220 reality by megawatt hour in 2021 to.
<unk> profit from this situation, we increased our energy production by burning bagasse, both owned as well as Bruce choose from third parties, what chips purchased from third parties and sugarcane straw collected from the field.
Our higher energy production enabled us to participate in high margin operations as well as we see next.
We saw it exported energy totaled 731000 megawatt hour, marking a one 8% increase compared to 2000 and twin whereas our co Gen efficiency ratio was three 3% higher.
Let's please turn to slide nine where I would like to discuss annual sales.
You can see on the right chart net ethanol seats from the full year amounted to 172 million, marking a 54% increase year over year. This was mostly explained by a 46, 1% increase in average selling prices. Despite the three 3% broadly in ethanol volumes compared to 2020.
Looking at the fourth quarter ethanol net sales increased 18, 2% on a year over year basis to $80 million driven by a 76 point.
4% increase in average selling prices measured in U S dollars.
Mainly led by anhydrous ethanol.
This was partially offset by a 33% year over year decrease in ethanol is hitting volumes due to lower crushing which resulted in lower ethanol production. Despite a full month's recession combined with a 55, 6% increase in our inventory levels to benefit from higher expected prices.
A brief comment on C volumes due to the efficiency and sustainability, where operations ranked among the highest in the industry. We have the right to issue carbon credits every time, we send ethanol. During 2021, we sold 500, a 3.5 thousand she values underwritten overview of program at an average price of 41 to <unk>.
Please proceed bio approximately $7 40 Bayou.
Because by energy at say amounted 43 million $17, 3% higher compared to 2020. This was fully attributable to an 18, 5% increase in average selling prices measured in U S dollars standing at $46 per megawatt hour driving by the low levels one in the reserves.
Most of the year and energy spot prices increase, especially during the third quarter of 2021.
And by increasing awareness to production, we were able to capture the upside.
Brazilian government created a program called 417.
17 through which companies that generated more energy than they did in the previous year could makeup rights awful.
This enabled us to sell 15321 megawatt hour at an average price of 1659 wells per megawatt hour.
<unk> monthly.
<unk> hundred dollars per megawatt hour last.
Lastly, net sales of sugar during the full year reached $207 million.
Three 1% higher year over year, mostly.
Positive results were driven by a 40, 618% increase in average selling prices measured in U S dollars, which stood at $17.04 per pound.
Higher average selling prices were partially offset by a 16, 2%, we'd actually sending volumes explained by lower sugar production on account of pool and the maximization.
With an increasing inventory levels in line with our commercial strategy to carryover stock in order to profit from higher expected prices on a quarterly basis <unk> decreased 10, 7% to $64 million on lower selling volumes due to the same dynamics of the full year.
Let's move to slide 10, where I would like to explain our total cost of production.
Total cost of production describes on a cash basis, how much it cost us to produce one pound of sugar and ethanol ensure equivalent.
Maintenance Capex is included in the calculation Cct's, a recurring investment necessary to maintain the productivity of the sugarcane plantation.
We are calculating sugar and ethanol cost energy steamed a byproduct and thus deducted from total costs.
The tax recovery line. It includes the Ics tax incentive that the state of Mato Grosso soon granted us until 2032.
In the table total cash cost on a per unit basis in 2021 increased by 33, 4% compared to the previous year, reaching $10.05 per pound of sugar and equivalent.
Higher cost per unit is explained by a 44, 8% increase in total production costs due to a 15, 5% increase in harvested area and increasing agricultural partnership costs, driven by an increase in <unk> prices.
And increasing the cost of inputs higher cost of idle capacity due to the early start of inter harvest season.
And lower dilution of fixed cost on lower productivity. Moreover, there was an increase of 25, 6% in maintenance costs related to higher replanting cost as a consequence of the frost and the anticipation of the virtues of equipment to accelerated harvesting activities on.
On the other hand, these negative effects were partially offset by $36, 4% higher tax recovery on account of higher add on sales.
$32, 8% higher energy cogeneration.
It's important to point out that since we own 95% of the gain we crushed ore.
Every time <unk> prices increase our agricultural margin also increases.
Regarding the hike in 40, United cost our exposure to potash fertilizers margin as we replace it with concentrated vinasse generated in our own operations.
Finally to conclude with the sugar ethanol and energy business. Please turn to slide 11, where I would like to discuss financial performance during.
During the quarter adjusted EBITDA amounted to 65 million, marking a 19, 8% decrease compared to the same period of last year. The main driver behind EBITDA decline was an increase in costs, mostly driven by fertilizers fuels and lubricants. In addition to higher costs associated with idling capacity.
You know what moves due to low smoke and availability during the quarter.
However, adjusted EBITDA for the full year marked a new record at 335 million 31, 9% higher than during the same period of last year.
Higher results were explained by our 38, 7% increase in net sales coupled with our $38 3 million gain derived from the mark to market of all were harvested gain due to higher <unk> prices. This was partially offset by an increase in cost combined with the loss in our commodity hedge position.
And $7 3 million increase in selling expenses.
I would now like to move on to the farming business. Please our regular attention to slide 13.
We ended our 2021 Harvey.
Harvest season, with over 1 million tons of agricultural products harvesting and transporting a gross 10 provinces in Argentina and Uruguay for this new campaign that we are currently engaging we have increased our total panty did re up by eight 1% compared to the previous harvest season to over 290000 negatives.
The increase is driven by a greater leased area.
In most of our regions abundant rainfalls was registered favoring planting activities and crop development. However, other regions experienced dry weather throughout December until mid January which coupled with high temperatures caused a minor delay in the completion of <unk> David is across a few hedges.
Since then Precipitations have increased nevertheless, we're following closely the water requirements as we are going through a critical phase in the development of most of the crops.
Let's move to page 14, where I would like to walk you through the financial performance of our farming in Entre formation businesses.
Adjusted EBITDA in the farming and land transformation business amounted to $124 million for the full year.
Marking up 15, 8% year over year increase.
The increase is mostly explained by an over performance of our farming business in the case of land reclamation, we have not conducted any farm sales throughout the year.
Starting with our club business adjusted EBITDA for the full year amount is 52 million, marking a 48, 9% year over year increase.
The main drivers towards this growth with.
A $59 million increase in gross sales.
25 million year over year gain related to the mark to market of our biological assets eating and increasing hectares.
And prices.
And 9 million year over year gains driven by our commodity hedge position.
This was partially offset by an increase in costs due to inflation U S dollar terms.
And our rice business adjusted EBITDA reached 41 million.
19, 5% increase compared to 2020.
The increase is mainly explained by an increase in sales led by higher years, which reached a record high of seven eight tons per Hector I remember with an increasing area in prices and an 18 million year over year gain in the value of our biological asset and agriculture produce positive results were partially look.
Said by greater costs related to inflation and the U S. All of it is done.
Moving on to the dairy business adjusted EBITDA margin of year over year increase of 26, 2% to $23 million for the full year.
Higher results were explained by.
An increase in both volumes and average prices.
And our continuous focus on achieving efficiencies in our vertical integrated operations together with increasing our productivity levels in every stage of the value chain.
On the other hand results were partially offset by higher costs due to inflation and new U S dollar terms.
No no farm sales were conducting during 2021, the non transformation business reported an adjusted EBITDA of $7 million. A positive result reflects the mark to market of an account receivable and corresponding to the latest sale of farms in Brazil, which tracks the evolution of soybean prices.
Let's now turn to page 16, which shows the evolution of our regardless consolidated operational and financial performance.
During the year, our operations delivered a new record in gross sales, which exceeded 1 billion in adjusted EBITDA, which amounted 477 million, marking a 27, 8% increase compared to the previous year.
So in time 2021, Mark the last year or five year plan in which we invested in expanding our business lines in order to integrate vertically our operations improve efficiencies and enhance our competitive advantages. Thus our operations delivered a $152 million of adjusted free cash flow from operations during two.
<unk> 21, compared to the 109 million generating.
This amounts to a minimum distribution of $61 million to be paid.
During 2022 through dividend and buyback.
35 million will be paid via dividend in two installments of $17 5 million niche in May and November the balance will be distributed via share repurchase under our existing program as the case may be year to date, we have already repurchased $10 6 million insurers.
Operational point of view, we are continuously increasing over a plenty the area each year, while enhancing our efficiencies of the pharma and industrial industry level.
Thus, our production crops and rice increased eight 2% year over year, whereas a great delivery accounted in the sugar ethanol and energy business allowed us to mitigate the impact related to the frost and Brian whether during 2021 at the industry level.
To conclude please turn to slide 17 to take a look at our net debt position from December 31st of 2021 net debt amounted to 618 million, marking a $107 million or 14, 8% decrease compared to the previous quarter lower debt levels from our farming business alone.
With a five 3% quarter over quarter increase our cash position were the main drivers towards debt reduction.
Generation was driven by greater collections throughout the quarter, whereas positive free cash flow allowed us to pay down debt and the farming 11.
On the other hand net debt decreased by two 7% on a year over year basis, due to higher cash, which enabled us to pay down debt as well as distributing it with shareholders, However, cash and equivalents rub, 46% compared to the previous year, mostly explained by an increase in marketable inventories.
$16 million in order to benefit from higher expected prices.
Worth to mention that our cash position for the fourth quarter of 2020 reflects the short term working capital lines. We raised throughout the year in light of the COVID-19 pandemic as part of our risk management program.
We believe that our balance sheet is in a healthy position not only based on the adequate overall debt levels, but also on the term of our indebtedness one of which is long term.
Our net debt ratio went down to one four times this quarter.
Paired to the one six times and one nine times seen in the previous quarter and last year respectively.
Same time, our liquidity ratio, which is calculated as cash and equivalents plus marketable inventories divided by short term debt reached three times, 53% above last quarter's ratio of two times and 14, 6% higher than the same period last year, which reached two six times.
This clearly shows.
The full capacity of the company to replace short term debt with cash balance without racing is funded capital.
Thank you very much we had time, we are now open to questions.
Thank you the floor is now open for questions.
Do you have a question. Please press Star then one on your Touchtone phone.
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<unk> will be taken in the order they are received.
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On optimal sound quality.
Please hold while we poll for questions.
So that's the first question comes from Isabella <unk> with Bank of America. Please go ahead.
Thank you and good morning, everyone and lung Mariano Charlie Thank.
Thank you for the call.
I have two questions first of all on sugar ethanol.
Yeah.
More on the cost side, we saw a big increase last year, which I understand has a cup combination.
Combination of various factors, including.
The area expansion right could you.
Give us some color.
Do you expect in terms of area growth in the 2000 22023.
And on the news.
In its place is right how much costs should increase.
Aimed at lax crop season, as well just to understand how this cost base well will continue moving forward and the second question on the farming side.
I think you provided some color right about the weather impacts in linear.
And at this point the planting it's pretty much concluded and harvesting is beginning.
Is it possible to quantify any potential downside in terms of yields or can we assume something similar D. C. Then compare to the last one thank you.
Okay.
Okay. Thank.
Thank you Sheila for your question.
And one last thought.
To give you more color on that crop on the sugar and ethanol.
That our plan.
And we have growth Selwyn Renato can you lead multi quarter or they are.
Okay tankers available portal.
<unk>.
What mansion.
By Charlie and Mariano.
We will have a first and master very challenging in terms of.
Sugarcane yields because of the frost lets a year.
With regard Canyon is moving very well for next year.
Don't have any.
Brought them more legs, the sugarcane fields are very well an infusion of distributor contributed a very.
Good.
Blend with a lot of sugarcane, that's when you'll be harvest in the second semester. So.
It should be.
A lot of.
King.
Sugarcane harvest.
Harvest in the second semester.
So we'll think about.
This is going to be more than sufficient to campaign states. These lower productivity in the first boot.
And then you are going to two to wind up watching with slightly higher.
This year compared to last few years.
Regarding the increase in the area, we are going to we supposedly 9000 hectares, which was the expansion plans that we did.
Last a year.
But we don't think that we will have a call.
Greece, and Bulgaria, because we expect that our U S.
<unk> is going to be slightly higher than the last few years.
We think that the.
That's the overdue go forward sugarcane situation the second Samantha Barber review.
Catch up the gap that we have referred to some math because where we are.
We're expecting the crushing season now in March we had already started in Angelica and you would start then you can have.
Two days.
Got it.
To make sure I understood correctly so.
<unk>.
The cost per units right that we saw growing 30% if I'm not mistaken last season.
Should be largely flat in 2022 23, even considering the <unk> expansion.
Exactly yes.
Yes.
Exactly.
We're going to have a higher yields.
This year compared to last year, and we don't expect.
The same amount of increases in agricultural inputs.
That's what happened last year, and I think as Mariano mentioned before we had some advantage in terms of cost I think the concentrated vinasse, which is the our bio fertilizer, which will have a plant in Vietnam, Indonesia Africa that is able to produce all the pulp Boston fertilizer that we.
Consume.
Ah represents a saving of approximately <unk> <unk> per Hector puts a lot of savings that we will have in deferred July there.
Also we have other things that is going to help a lot.
The increase in an hour.
And they are the <unk>.
MPD planting actually we have a bill fabric.
<unk> sorry in <unk>.
Thank you Erica if we can produce.
6 million.
The seeds of MTBE, which is.
<unk> to blend it between 16 and 20000 hectares with a much lower cost.
Traditional plant. So we are confident that we are not going to have.
The increase in costs as well.
Last year.
Yeah.
Thank you Vanessa.
Isabela.
I'm sorry, the second part of your.
A question.
Regarding the in the weather in Argentina and Uruguay.
And how that could upset looking.
I would say that we are in the middle there.
So we have already planted 100% and we have already planted wheat.
And our next set of situations how the planting is all very well then we all day battery life. All the Academy as everything has been applied on time, and so that could upside will tell you that that looking very well of course that out of the current climatic installations all over.
Without a lot of ready well diversified crop situation.
Then when he was the red sea by crop situation.
Sure.
Hey that engender that we expect to be within the reach of <unk>.
We are.
Being able to watch it on an average year, we didn't have any tier I would say that rice will probably be some way below that what's happened last year.
Maybe Gordon I'm, sorry, I'm sorry.
So it'd be maybe a little bit.
Yes.
What happened last year. So in general I would say outreach is the answer.
We asked <unk> in.
Let me love it.
Process, we just started harvesting all the <unk>.
I think that we stopped eating rice flours hit that are doing well, but they I would summarize on.
On D C. Rachel whether we are a REIT.
We reached a as we are starting to harvest.
Okay.
That's very clear thank you very much.
Thanks.
Questions.
Thiago Duarte with Banco BTG posture, while please go ahead.
Thank you good morning, everybody My do you Wanna, Charlie had not too.
Yeah, two questions on our side here. The first one is it's actually a follow up on with him out to them on the discussion.
Regarding sugar and ethanol sugarcane yields actually.
And auto can you can you quantify a little bit more towards on the yield improvement that you expect for the year I understand that you still expect below average yields for the first half of 2022 on the back of the lingering effects from from last year's drought, we have an improvement in the.
In the second half of the year, but can you can you give us a sense of how much of an improvement if you think of the balance of the year.
You're looking for when you think of the center South we are hearing.
<unk> from from 5% to 10% in yields across the center South of Brazil. So just wanted to sort of position, where where you expect to be with.
With vendor or outside this range it would be nice to have.
And the second question.
So going going back into farming, particularly in Argentina.
I just wanted to hear your thoughts on you know there was this is news this week regarding bans on exports of soybean meal and oil and just to so just wanted to hear from you whether you think this could.
Sort of anticipate higher export taxes are written Sean is on siding.
For the for the coming crop would be nice to hear as well. Thank you so much.
Okay. Thank you Thiago for your questions.
So do you want to answer the first.
Quick question.
Hi, Chard with thank you for your question.
We are in the thing lineup.
So we are expecting to have increased needs.
Between five and 10%.
I think all the features that we have the.
The sugarcane supply and also at our news will be them off to crush margin gain in a shorter period of time, so we're going to crush more lightly.
Slightly more this year than last year, but the regarding the yields we are in line with the rest of the center salt.
Thank you Renato.
Uh huh.
And regarding your second question on Argentina in D C export taxes potentially increasing export taxes.
That's something that.
It's a discussion that starts because of this huge increase in the commodity price.
And that's something that usually happens in discussion about this that reality east that they've learned can only increase 3% of the export taxes without going to call them. Today. So the possibility is only 3% on what we hear to yesterday.
From the line of Duffy Jackfish that yeah, not wondering could east DC at 3% that they could do so.
We really don't know what's going to happen of course, but if it happens it's only a 3% increase and he says people are sending producing this export taxes on soy corn and.
And the maximum potential.
That means around 10% of I would've thought that says now wheat, 30% have already been sold or or.
So the impact in our particular DNA East Latam.
Relatively low if that happens, but I would say that the Gulf coast, Eddie said possibility I personally.
All of these on paying debt laden happening in debt to EBITDA.
That's very clear. Thank you Mariano thank you hang onto them.
Ladies and gentlemen, our next question today.
So we'll have tomorrow.
Please go ahead.
Hi, good morning, everybody.
First question Charlie.
The distribution policy.
So you're competing with the 40%, but my question is simple we saw when do you guys analyze like affordable room in the balance sheets, given the free cash flow generation should be generally in 2022, I guess should be strong one.
When you analyze what could be potential for increasing that amount.
Over the year can you remind us if it could be like extraordinarily payments up to waltz.
Well this year.
My first question on the second question.
So one on <unk>.
Don't ask much from you guys about this one but on rice.
What do you think that's what's going on with our overall agricultural prices weakened, especially wheat soybeans and corn could also push.
<unk> prices up.
I think we haven't seen such an important move and the prices, but if you can update on on that one we should expect on the back of overall, how costs and the higher green.
Grain prices wife's prices should also be.
Should be benefiting from somebody Brian Thank you.
Yeah.
Thank you Luca for your questions.
And they get out of them.
What are the initial body heat as you said, it's very clear that at.
At least 40%.
And we have the same capital allocation strategy.
We are very comfortable now that we have the safe sustainable cash flows and that.
We are.
Having enough.
A free cash from operations tool.
Always called gliders policy and also continue to pursue some.
The opportunities that that have seen that is I think what we are currently having.
As you can see during last year.
We distribute it.
50% of the net cash from operations.
The here, we are talking about at least 40% of course, this could potentially be high yet, but that will depend on the different opportunities on the need for it and the prices of the shares on.
What would be while in London during the year so.
What are compromised so very clear out or will be maintained and that is something that we've been talking about since we announced our five year plan that was back in 2017 and sell from here in 2017, we manage are very clear that 'twenty 'twenty. One was the first theater, where we would have.
Volume two studies using M S.
To start victory building.
Yeah.
So our capital on.
2021, we distributed five more than 5% of the equity of the company said well, what's shadow throw it up so.
This year.
We had a very cold coffee is that we will continue with that same line item.
Then going back to the second part of your question regarding the potential increase in price.
In general.
Rice peanuts, sometimes say safflower sunflower in this particular year has grown a lot more because of what's going on on one off that reach I'll step out of that name Carlino setups.
But.
They take more time to increase and decrease than the products that are more liquid like corn and wheat that you were mentioning. So today, we are already seeing an increase in prices.
Right in general and Thats something that is happening as we speak when we started the year out and we saw good evening in wheat.
Rice was not the cause he can get done now right. It's already so we would expect that the Reits have been that's where we'd always we love showing pennies.
And in line with what's going on with the rest of my life.
Great. Thank you very much.
Thank you ladies and gentlemen. This concludes the question and answer session. At this time I'd like to sort of a Forbes article Mr. Bolles for any closing remarks.
Yeah.
Thank you very much everyone for your participation in our next call.
This concludes today's presentation you may there's a centralized at this time and have a wonderful day.