Q2 2023 Adecoagro SA Earnings Call
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Music
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They involve risks uncertainties and assumptions because they relate to future events and therefore independent 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 our Nicaragua 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, and thank you for joining either go out of 2023, Michigan Water Research conference.
As you may have seen in the report we are presenting very good results. Despite the extreme drought.
But some of our operations, our adjusted EBITDA was 15% higher compared to last year.
Edition bunch like these when we can clearly show on monetize the benefits of being diversified and focus on achieving efficiencies you know what the whole value chain.
We are really excited about how our sugar ethanol and energy business is performing.
Then even opened of our sugarcane plantation is really good and we expect to increase crushing volumes by 15% compared to 22.
We have a large fleet C. D D D. Two ships, but all action and we are using it to maximize sugar production.
We have about 25% of this yes sure production and almost all.
Our next yes, still a hitch and very well position to continue to capture solid prices.
30% of our expected on U S ethanol production.
You know what is that.
To be sold in the following quarters.
This decision to carry for what it's done is already proving to be a good one.
Prices are expected to increase following the increase in gasoline prices on the auto side the growth.
The reason why our sugarcane plantation is in great shape.
Because of our focus on achieving efficiencies as I mentioned before.
Throughout the past years, we have boots, especially focused on our funding activities.
As a result.
We are reaching in crazy, we're levered itself Trs content per hectare.
For example.
We implemented all that pivotal data or Brett Brown Sydney.
Through that won't get vacation or manage them, which you said technology only used by yes. These she named assessed to reproduce game variety that a bit that uptick to our region.
Much faster pace and replace the older bucket.
We haven't built a factory, that's not producing 26 million more or less every year.
We are using to learn how to Vista, which not only reduces diesel consumption birth dawn, but also soil compaction.
Leading to better use I'm sure okay.
We use biological pesticides to control plates.
We use drones and artificial intelligence to monitor our plantation and up like how do we say, it's only in the areas, where we didn't per station.
Among many other big songs.
These innovations out to.
Not only about our broker dealer deliveries, but also reduce our costs, but dawn unimproved our global footprint.
Well. The example of this is how our production of bio methane.
Which we are already using to power more than 130 basis.
Placing decent consumption.
We are very happy with our reach on where we are located with our sugarcane plantation or an hour means.
They worked at least on the potential that we still have a hint.
Now, let's move into our farming business in Argentina and Uruguay.
In our crops business as we mentioned in the past releases, we experienced an unprecedented run up our results in this segment out a reflection of this.
Now we are focused on the 23 during the fall campaign, where we are starting fresh with no long term, but you know what isn't it potential from that at all.
We have already started planting activities, we have with expectations for the new crops wheat flour IV and in your forecast.
You know what do they do business.
Last year, we finished populating our for Freestor.
Relativity go K marginally down as we navigated the challenges of operating at full capacity.
This year through DVD, he sounds like got leverage reaching almost 38 liters per cow per day on average.
In terms of prices that he said mixed but a four months, but we have the flexibility to add up to that context.
In the case of our rice business.
The decision, we made last year to set their food in Uruguay.
By acquiring four rice means strategically located east already paying off.
In Argentina, even after it right year, we managed to do very well.
We own and operate one of the largest fully integrated REIT operations in the war.
Under a sustainable production model, where we develop our own seed genetics and produce varieties customized to our clients' needs.
We are building trusting relationships with clients all over the world and consolidating as a leader of these market offering high quality rice and full production traceability coming from Uruguay and Argentina.
Now.
We have a huge opportunity in front of US there is a lack of water in many is that producing country shelf that war.
And they are cutting that rice exports.
This means that there will be a very clear need for South American rice.
Having operations in Argentina, and Uruguay, we are uniquely positioned to benefit from these.
I think we are very enthusiastic about is the work we are doing in the ESG front with.
We have been working on emphasizing the sustainability profile of our production models.
And monetizing that they sell off kind of a crazy Betsy is the most obvious example.
But we also have similar certification for our products and processes and clients willing to pay a premium for them.
Sustainability is part of our DNA.
Everyday we work to develop sustainable actual motives in the interior of the countries, where we operate.
In our <unk>.
ESG report, we show with great detail, how we do these.
I invite all of you who are interested to read it.
We have a very positive outlook.
Also we are complying with our distribution policy.
We recently distributed dividends and we continue repurchasing shares always maintaining our leverage below two times EBITDA.
To conclude I want to thank our teams.
This year started off with many challenges.
With your hard work and commitment to efficiency.
We now have a very positive outlook ahead of us.
I feel confident that we will continue to generate good returns and value dollar shareholders.
Now I will let Emilio walk you through the numbers of the quarter.
Thank you Mariano good morning, everyone.
Let's start on page four with a summary of our consolidated financial results.
Gross sales totaled $407 million during the second quarter, making a 6% year over year increase while on an accumulated basis, it reached $654 million, 11% higher than the previous year.
This was mostly explained by our commercial decision to favor sugar production and execute sales and solid prices, coupled with higher average selling prices in our rice division.
Sequentially adjusted EBITDA expanded to $136 million during the quarter, whereas year to date, it stood at $226 million, 15% and 10% higher than its respective previous periods.
Please turn to slide five for our brother view over our consolidated financial figures.
As you can see on the bottom right chart crushing volumes in our sugar ethanol and energy business were up 42% on a year to date basis on account of greater sugarcane availability and solid productivity indicators.
On the other hand.
Total production in our pharma Division reported a 27% year over year reduction, mostly explained by crops due to the effects of an unprecedented drought in Argentina, which impacted area in volume produced.
Let's move ahead to slide seven with the operational performance of our sugar ethanol and energy business.
Crushing volume amounted to $3 6 million tonnes during the second quarter, making a 9% increase versus the prior year. This was mostly driven by solid productivity indicators and hence like good precipitations registered during the first six months of the year.
The us agricultural productivity indicators, such as yields presented a year over year improvement from 60 to 78 tons per Hector in the quarter, while Trs content increased from 119 to 126 kilograms per tonne in.
In terms of mix, we diverted as much as 48% of our Trs to sugar production in line with our strategy to maximize production of the product with the highest marginal contribution.
Within our ethanol production, 70% was anhydrous and to further profit from the premium this ethanol demand that we had already over 22000 cubic meters of hydrous ethanol stored in our tax.
On a year to date basis crushing volume reached $5 1 million tonnes.
42% higher year over year this.
This is explained by a significant improvement in yields and Trs content.
Well to the greater sugarcane everyday reality, which enabled us to resume our continuous harvest model during the first quarter of 2023.
As mentioned before.
Actual mix stood at 48% sugar in line with the quarter.
Shown in the boardroom right chart, while we maximize sugar production throughout the first semester profit from the rally in global sugar prices.
The opposite was observed last year as ethanol prices reached record levels in Brazil. This groups the high degree of flexibility of our mills.
Please turn to slide eight where we would like to describe I will say is throughout the year.
Net sales amounted to 170.
$79 million during the quarter and $274 million in the first semester, making at 9% and 18% increase compared to the previous year respectively.
In both cases, this was driven by higher sugar sales on higher production and prices, which fully offset the year over year reduction in ethanol sales.
As you can see on the top left chart selling volumes of sugar amounted to 317000 tons year to date.
As our mix decision favored sugar production to capture the price premium over ethanol. Consequently, our average selling prices increased 9% during the first semester and we benefited from an accident sugar prices.
Okay, So listen now.
The decrease in volumes sold was driven by a reduction in ethanol production, coupled with our commercial decision to increase our carryover sucks.
The year over year comparison does not see fare during the second quarter of 2022, we took advantage of a market opportunity that ethanol offer and so lessen all at very attractive prices.
As explained in prior releases last year, we sold most of our ethanol volumes at prices as high as 26 cents per pound equivalent.
Taking advantage of a shortage in supply caused by the late start of harvesting activities in Brazil.
It is worth highlighting that this year. We also benefited from a peak in demand and sold 52% of our ethanol volume there capturing 12% above the average price over the quarter.
Within the 132000 cubic meters of anhydrous ethanol sold year to date.
22000 cubic meters were exported at an average price of 25 cents per pound equivalent out of which 16000 cubic meters were conducted during the second quarter at an average price of 28 cents per pound.
This is so since we have the necessary certifications and industry capacity to meet products' basically which.
On an accumulated basis.
Energy selling volumes increased 13% compared to the prior year, even though its average selling price decreased by 10% due to low energy spot prices regarding carbon credits year to date, we sold over 250000 survivors, 34% lower than the previous year.
<unk> price.
$18 first Avaya. This is explained by the lower year over year production and sale of ethanol, which led to a lower amount of carbon credits issued.
Please go to page nine where we would like to present, the financial performance of the sugar ethanol and energy business.
Adjusted EBITDA amounted to $117 million and $194 million during the second quarter and the first half of the year respectively.
In both cases, the increase in adjusted EBITDA was driven by higher net sales as well as gains in the mark to market of our harvested gains on higher crushing volume How's.
However results were partially offset by a year over year loss reported in the mark to market of our commodity hedge position.
Finally to conclude with the sugar ethanol and energy business. Please turn to slide 10, where we would like to briefly talk about the current outlook for the rest of the year.
Assuming weather going normal we expect our crushing volume in 2023 to be approximately 15% higher than in 2022, as we have sufficient sugarcane availability to use our industrial capacity.
This in turn will result in a reduction of unitary costs due to better dilution of fixed costs.
From a commercial point of view sugar prices continued to be supported by strong fundamentals.
Trading on average about 24 cents per pound.
We are in an excellent position to profit from this scenario as we have 25% of our expected 2023 sugar production unhedged and.
For 2020 for 90% of our sugar position remains open.
In the case of ethanol, we are taking advantage of our storage capacity to carryover production into the following quarters to profit from higher expected prices we.
We believe that ethanol will continue to play an important role in the energy transition matrix not only in Brazil, but globally and we believe I think a lot of it will make its contribution.
Now we would like to move onto the farming business. Please go to slide 12.
I saw the beginning of August 2023, we harvested 96% of the total area and produced over 800000 tons of agricultural produce the remaining hectares are expected to be fully harvested during the rest of this month.
As anticipated yields for most of our summer crops presented a significant decline compared to the previous campaign due to record drought that Argentina, Uruguay experience as a consequence of linear weather event.
Nevertheless.
There have been positive developments impacting the price of some of our products, which helped us to partially mitigate the weak performance at the farm level.
The government passed a resolution that allowed for the use of a preferential FX rate to convert the proceeds from sales of rice, soybean corn, and sunflower, which partially offset the increasing needs.
Also in the case of Rice, India the world the world's largest <unk> quarter recently announced the ban of long grain white rice exports to secure domestic supply thus.
We expect to profit from this thanks to our flexibility to sell into the export market and offer a foolproof traceability.
To conclude we began planting activities for our Mexican PE starting with.
Another winter crops, we expect a positive outlook for the upcoming season, especially since of what our focus is shifting to moderate ethylene new partner.
Which should allow for an improvement in soil moisture and recovery of water levels in the reservoirs favoring the outlook for the 'twenty three 'twenty four harvest season.
On the following page 13, we would like to present, the financial performance of our farming and land transformation businesses.
Adjusted EBITDA totaled $24 million in the quarter, making at 22% year over year increase.
Year to date.
Adjusted EBITDA was 43 million, 23% lower than the previous year.
In both cases this was explained by an outperformance of our rice and dairy divisions, which fully offset the poor performance of crops as expected due to the record drought goes by linear weather that affected yields.
Starting with our crop business adjusted EBITDA amounted to $313000 and $509000 during the second quarter and first semester of the year respectively.
Curiously explain results were mainly impacted by the reduction in yields coupled with a genuine increase in costs in U S. Dollar terms as a reduction in planted area versus the previous season.
Adjusted EBITDA in our rice business.
$15 million during the second quarter.
$27 million on an accumulated basis.
Despite a reduction in yields compared to the previous campaign and higher costs in U S. Dollar terms adjusted EBITDA was higher year over year.
This was driven by an increase in both volume and average selling prices due to a better mix of higher added value products as well as the use of the preferential exchange rate mentioned about among other factors moving onto the daily business adjusted EBITDA totaled $10 million, 41% higher than.
Prior year.
While year to date, it stood at $16 million, making up 15% year over year increase results were explained by higher average selling prices as we produce more fluid milk for the domestic market, which offer the highest marginal contribution to these periods coupled with our continuous focus.
And achieving efficiencies no vertically integrated operation.
Results were partially offset by higher costs, including cost of feet of our dairy costs.
Case of land transformation, although no farm sales were concluded results reflect the mark to market of an account receivable corresponding to the latest sale of farms in Brazil, which trucks the evolution of Soviet prices, Let's now turn to page 15, where we would like to present, our capital allocation strategy in 2020.
Two we generated $141 million of net cash from operations. According to our distribution policy. We are committed to a minimum distribution of 40% of the gas generated during the previous year via a combination of cash dividends and share repurchases.
In terms of dividends on May 24th we paid $17 $5 million in cash dividends, representing approximately <unk> 16 per share, which corresponds to the first assortment of our and I don't know the cash dividend. The second shall we pay a rule in or about November and an equal amount, resulting in another.
On a cash dividend of <unk> $35 million in addition.
We have already repurchased $14 million in shares year to date, which represents approximately one 6% of the company's equity.
Moving on to the debt position, our net debt increased 3% compared to the same period of last year amounted to $852 million.
This was explained by the financing of our working capital requirements, mainly related to advanced purchases of our records of inputs at attractive prices in order to take advantage of low cost of capital.
Furthermore, the Brazilian real appreciated 8% versus the prior year. Consequently in banking our debt denominated in such currency.
As of June 30 of 2023, our liquidity ratio.
One three times showing the company's full capacity to repay short term debt with its cash balances.
Whereas our net leverage ratio was one nine times in line with the previous year.
To conclude 29% of total capex invested throughout the quarter was testing two expansion project.
Investments in this front were mostly related to continue increasing our sugarcane plantation.
There's other complementary projects such as the construction of our second bio digester in Brazil to increase our biogas production, which later is converted into biomass and is used to replace our diesel consumption.
In our pharma Division, we are finalizing the construction of our second buyer the gesture in our dairy business.
Which will be using common use as an input to generate renewable energy project that is aligned with our sustainability Committee.
Thank you very much for your time, we are now open to questions.
Thank you the floor is now opened for questions.
If you have a question. Please read it out in the Q&A section click on raise hand audio questions.
Please remember that you were companies named should be visible for your question can be taken.
We do ask that when you pose your question that you pick your headset to provide optimum sound quality.
Please hold while we poll for questions.
The first question is from Thiago Duarte from BTG Pactual your microphone is open.
Hi, Hello, D&O, Emilio and Ocwen and the rest of the team. Thanks for the opportunity I have to two two points I wanted to address with Renato on the sugar and ethanol business and then one final question if I may.
My view on when a million on capital location, so so to hang onto first.
And.
Can you just talk a little bit about the <unk>.
Possibilities that you have for increasing or enhancing even further the flexibility to you know to sort of move away from depressed ethanol prices in Brazil right now.
So I'm basically asking if you. If you guys are planning or is there any possibility for increasing.
The capacity of producing sugar, even more than than the maximization that you have in place right now and also if you could talk a little bit more about the opportunities for exporting ethanol even more than you have been doing so well I see that you guys captured pretty interesting.
Export prices on the ethanol business, but the volumes are still not that representative.
Considering the total ethanol volumes there. So if you could elaborate on whether there is room for as I said, increasing sugar mix and increasing or do you think theres room to increasing ethanol prices ethanol export volumes even further.
And the second one on Biomethane.
You know, it's very interesting what you guys are doing in terms of producing more biogas biomass thin and using that as a replacement of diesel can you talk a little bit of the economics, how the cost of Biomethane compares to the cost of diesel.
I don't know if you can talk about the unit economics, there too. So we can get a sense I get the de carbonization impact, but I also would love to hear a little bit of the economic impact of that.
And finally to our I think to my view on what they need to.
If you could talk a little bit about capital allocation now right. Because you guys are are heading to a.
For two and ice here after all in terms of <unk>.
Margin expansion in sugar and ethanol good rice prices, we think are.
There's there seems to be a good with prospecting in terms of cash flow generation the.
The expansion Capex you mentioned in the presentation a few projects that you have ongoing but it feels like a UI that theyre going to be paying more being paying out dividends or repurchasing a lot of shares.
Or you might have new projects in place, where if you could talk a lot elaborate a little bit more on that what we should expect now that the company is deleveraging apparently even faster than we thought before thank you.
Yeah.
Thank you very much for your question.
Thank you.
You mentioned Renato will address your three main points on the sugar and ethanol and then.
We will take the capital allocation.
Hi, Thiago Thanks for your question.
Regarding sugar production.
First it is important to highlight that we have been producing a lot of sugar this year.
In composites.
In July we have reached our monthly sugar production records. After the we have produced 160000 pounds.
A month, which is 12% higher than the last two new records.
We haven't been able to produce more sugar than our installed.
In fact, there were a couple of optics actually in July and August reducing.
82% more than our installed capacity.
We are producing a lot of sugar.
And I think it is also important distributions of the sugarcane in the third quarter.
Each DRM.
Drs lateral mount them ours is higher than 150 milligrams per tonne. So thats, what we are doing regarding sugar.
Regarding expand our capacity for next year.
I really think that we are still having some some bottlenecks that we can remove out of the process.
Initially the bottlenecks in the operation.
We believe that we can produce more sugar.
By investing in those bottlenecks.
Moving to the bottlenecks windstream great game content.
It is lower than it is now.
And then let's see Andrew.
What would really.
41000 pounds of sugar in Florida next week.
Regarding ethanol well if you are doing and we are starting.
But today, we have margin 250 million liters of ethanol remember thanks.
And you think that the global fourth normal cycle growing faster. Please everybody was predicting actually I think that the boom of the Otto cycle Boucher, 11%.
Also the improved with Petrobras.
The amount of the dividend.
The gasoline price.
<unk>.
The best news of the ethanol with the cloud.
In a very good position.
Despite the rate to be close to 61, 62%. So we think there is a model for whom or ethanol.
The price of ethanol increase.
Especially when they are going to see them.
It starts with.
Most of them and then we will be standing because even though with higher price.
Regarding to the midterm I think we are very optimistic about it.
The project.
Today, our empower prediction basket of Mccann is close to <unk> non Florida is close to true true.
For computer, which is the one liter of diesel so.
Due to the depreciation so we have to replace that.
<unk> wants to maybe four five.
With me Tonight.
Of course, we never put a good rehab.
Potentially produce much more.
You'll get them then we can use in our fleet. So at some point do you have to sell new midterm.
Some buyers.
And then.
We are analyzing the best option to blues.
Thank you Renato.
<unk>.
Regarding the capital allocation. The first point I want to make is that we need to be to have clarity that we started a very challenging year now we are very optimistic on our future results but.
We have to understand that we are changing that situation as we speak so.
It is important to understand that we maintain our distribution policy that is the most important thing and also we want to be below two times EBITDA and net debt to EBITDA, so assuming both the things.
As you've seen that out a very specific project and very synergetic.
Project in the <unk> and some of them in the right and some of them in the data, but we don't see any large spec.
CP Chem project that will change our E.
Policy that is the most important thing that we have a hit.
Okay.
Alright, that's very clear thank you.
Next question is from the anatomy pie that is from Bank of America. Your microphone is open.
Good morning, everyone. Thank you for taking my question.
I would like to explore a beta on the farming side right. We are finally moving away from <unk>.
I am going to enforce it might look a bit better in terms of medical conditions.
A question that we have around that is regarding yields for the next year right because we.
We had the three years.
Conceptually.
We would like to have a bit of a SaaS, whether you see yields normalizing already the next harvest season or weather does it push channels the soil through treaty effective droughts.
That ought to be.
Our longstanding.
In terms of.
Productivity for the commission.
That's the question in terms of farming and another one in terms of theory, we are seeing that the company is already a BP.
Sure Ashwin.
In terms of the hurdles that you are managing your heart.
<unk> continues to grow and whether youre, reaching annual goal with terms that are operational.
Just the sheer size of the operation of theory.
You see continued tomorrow or we are stabilizing on that level. Thank you.
Hi, Matt.
For your question and number one regarding <unk>.
The elaenia forecast and the yields expected for next season and crops Verdi.
Very clear that there is no effect on their past drought. So we have started.
From scratch their new season. So we can expect a normal yields going forward, but theyre more with El Nino, we should expect of abnormal yields, but we are only using us a budget, they're normally to tailor their five yes.
The last TSA average.
That is regarding crops in general.
Then to your specific question on Sunday on Daily.
In <unk>, we add achieving an even going beyond the productivity levels, but this is within the same cow herd, we are not planning to increase our cow herd.
Now we are simply increasing productivity in a per call basis.
This increase in productivity also has to be taken into account the new.
No.
Biomethane.
Production that will start to produce by the end of this year. So that will also increase our sales through the sale of electricity generated by <unk>. So those are the increases that we have been in there.
Business on top of this also in the radio business, we should see improvement through this investment that we've done in the T cell factory.
And that will also increase our total sales, but in terms of their catalog productivity suddenly.
In.
This increase in productivity Pedocal basis.
Furthermore, there are some value added products in the domestic market that we are also.
Improving or achieving their market and that we large sole generic some.
Additional profits on that.
They do business.
Thank you that's very clear.
Next question is from Lucas Ferreira from JP Morgan your microphone is open.
Okay.
Hi, everyone. Good morning. Thanks, Thanks for taking my questions I have a few on Argentina.
The first one on the Rice business you mentioned the ban on exports.
While striking some important end markets you see already.
<unk> prices, increasing 30, 50% depends on the index you look so my question is on the Rice business. When you look at the marginal price you're selling exporting right now.
How much bigger. These this is versus the let's say the prices realized prices in the second quarter. So just like we have a sense of sort of the size of a potential upside you could see.
And the third or fourth quarters in the rice business.
The other question is more about Argentina.
Argentina macro so as you can remind us given the recent devaluation.
Our net exposure to the currency.
I mean, you obviously sell some local.
But most of most of these exports, but you have also the imports the chance to need to buy so just wondering the net effect that you would expect on the devaluation and you mentioned the preferential rates FX rates. So if that continues in this scenario just wondering what.
What to expect now with this new effects levels and your business. Thank you.
Hi, Lucas. Thank you for your question.
Regarding rice as we explained in that in our presentation.
We are very optimistic.
We see this advantage we see that we are very well prepared from South America from Argentina, and Uruguay. We these are largely operation that we have on the investment we did last year in getting into <unk>.
We are very well positioned to supply the world market and the same needs that the world has today.
How much this increase could be.
We are increasing compared to the last year.
And in a relevant value in 10 months prices.
Regarding the last day in particular.
Particularly increase in.
The ACM prices because of the ban of India that is also an increase for next year and we feel more comfortable there and we continue to benefit from that specific situation.
But it is more important than that because we are developing <unk> to specific clients all over the world and that is giving us an advantage on top off there.
Sure.
<unk> long grain rice IV.
They are more commodity in the Orion se.
But my services.
So that is regarding rice, and then regarding their market, but andina and these recent devaluation just to remind you raw margin Dana we export.
70% are between 70% to 75% on 30% to 35% on the domestic market, so and evaluate on a channel is positive for our margins.
It depends on when and how these evaluation happens is more or less positive we are well positioned to take advantage of the safe Pacific are measured.
Furthermore, we anticipated some acquisitions to stock inputs for these campaigns that we are planting now and that I mentioned, we were optimistic on there. We also took some advantage of.
Have these.
<unk> set a ton gaming guys already acquired on in our balance sheet that that a dollar denominated cost within the total production. So I would tell you that he sees many positive for us in terms of our future results.
Excellent. Thank you very much.
Once again to ask a question you need to click on race hand.
Next question is from Danielle <unk> from <unk> BBA your microphone is open.
Are you there.
Yeah.
No.
Daniel from it'll I think it is not there.
Okay.
That dynamic thanks, its Mike is not working you may have.
Ask your question.
And you type your question in the Bronx.
Yeah.
Hello, Daniel Sasson from <unk> sheath, asking I also have a question on innovative projects could you. Please give us some color if you are.
Looking into the SaaS market for ethanol.
Also on Biomethane do you see any potential to cellular technology to either meals in the medium to long term in exchange for royalties.
Yeah.
And another question regarding your cigarette division given the height in prices over the last couple of months do you have plans to increase your shipyard capacity for how long do you think that prices would have to remain this site before we see the industry increasing capacity as a whole once again.
Okay, I will ask Renato to answer the question regarding the Florida Division and the expansion that he has already mentioned something but there he can be more precise on that on this.
Donato.
Uh huh.
Danielle thank for aggression.
As I mentioned before we have brands.
Greece, our sugar production for next few years by removing some bottlenecks that we have been in the operation of the process.
By doing this we'll be able to produce more sugar when they're not as positive.
He was lower lower than third.
Third quarter for example, where we think we will have some potential <unk> gamma.
Yes.
It moves from 40 pounds.
Guns.
Or sooner.
Yeah.
Okay. Thank you are an adult we're hearing some noise on your microphone. So I mean I'll take the question on the bio methane and their technology, if that could be sold to third parties on an exchange of royalties for that.
That is clearly a possibility but today, we are focusing on the execution of our own project. We have some specifics on our production system that include these spontaneous.
Continuous harvest small and so because of the recent sand that we use all the vinyasa Saturday night set us at <unk> and that we are concentrating them and yes. So there are some specifics to our own project that makes us very profitable on developing this biolife.
So in our own production system. So we are going to focus on the short term on <unk> are now what our specific tushar can develop that with their financing of the knarr beyond all of that if that's done at the start we have in Brazil.
And after that we are going to analyze in more details the possibility of getting some money from the technology.
Then.
Alaska about DSA, new technologies like the sustained.
Sustainable aviation fuels. This is very interesting they're sustainable aviation fuels comes from.
In August .
And from ethanol. So both technologies that think that we are looking at it there are some petroleum companies that have asked us about the potential possibility. So we are simply looking at dose understanding how this will impact to this sector.
And whether there is any specific possibility for us.
Regarding the so we are knowing what's going on in analyzing that that sale, what we can share with you.
This moment dine in.
Okay.
Once again to ask a question.
Raise your hand.
This concludes the question and answer section at this time I would like to turn to.
Floor back to Mr. Bosch for any closing remarks.
Thank you all very much for participating and hope to see you all in our upcoming events.