Q3 2023 Adecoagro SA Earnings Call
Speaker 1: Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Atecoagros' third quarter 2023 results conference call.
Good morning, ladies and gentlemen, and thank you for waiting at this time, we would like to welcome everyone to our backlog was third quarter 2023 results conference call.
Today with US we have Mr. Mariano Bosch CEO, Mr. Emilio nickel. She has so Mr. Hanaq was you keyed up at Ada sugar ethanol and energy V. P ambitious Victoria <unk> Investor Relations Officer, we.
Speaker 1: Today with us we have Mr. Mariano Bosch, CEO , Mr. Emilio Nieko, CFO , Mr. Renato Junqueira, Pereda, Sugar, Ethanol and Energy VP, and Mrs. Victoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company's presentation.
We would like to inform you that this event is being recorded and all participants will be in listen only mode. During the company's presentation.
Speaker 1: After the company's remarks are completed, there will be a question and answer section. At that time, print instructions will be given.
After the company's remarks are completed there will be a question and answer section at that time further instructions will be given.
Speaker 1: Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of a decoagulos management.
Before proceeding let me mention that forward looking statements are based on the beliefs and assumptions of a backlog of this 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 investor.
Speaker 1: 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 a decoagro and could cause results to differ materially from those expressed in such forward-looking statements.
You should understand that general economic conditions industry conditions and other operating factors could also affect the future results of our quadro and could cause results to differ materially from those expressed in such forward looking statements.
Speaker 1: Now I'll turn the conference over to Mr. Mariano Bosch, CO. Mr. Bosch, you may begin your conference.
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 Glasgow 2023 set of quarter results call for us.
Speaker 2: Good morning and thank you for joining Ade Coagros's 2023 third quarter research conference.
As you may have seen in our report we are presenting very good operational and financial results.
Speaker 2: As you may have seen in the report, we are presenting very good operational and financial research.
Speaker 2: Our adjusted VDA during the quarter was $155 million, 27% higher compared to last.
Our adjusted EBITDA during the work that was hung up $55 million 27 in Boston.
Compared to last year.
We are very enthusiastic about.
Speaker 2: We are very enthusiastic about how our sugar and oil and energy business continues to perform.
Our sugar ethanol and energy business continues to perform.
Last quarter I mentioned some of the what we started doing a few years ago to enhance the productivity of our sugarcane plantation.
Speaker 2: Last quarter I mentioned some of the work we started doing a few years ago to enhance the productivity of our sewer cake plantation.
I mean, Sean.
Speaker 2: I mentioned, innovative techniques like pre-sprouted seedling and its reproduction in our own bio-factory
No what these techniques like Bruce Brown.
On a trip production in our owned by your factory.
The incorporation of state of the bottoming at Wakeman.
Speaker 2: The incorporation of state of the art farming equipment.
Speaker 2: The use of drones and artificial intelligence.
The usual neurons and artificial intelligence.
Speaker 2: biological pesticides, etc., etc.
You've got the best decides it ticked it up it should be done.
Speaker 2: During this quarter, we saw the results of our work. For example, we achieved record crashing volume of 4.5 million tons.
During this quarter, we saw the results of our work.
For example.
We achieved record crushing volume of $4 5 million times.
Speaker 2: The quantity and quality of our sewer cake plantation is in an excellent shape, with a TRS content per hectare over 30% higher year over year.
The quantity and quality of our sugarcane plantation in excellent shape.
We have theories content per hectare over 30% higher year over year.
Speaker 2: With this sugar cane, we produced a record volume of sugar.
With this short game, we produce there.
Record volume of sugar.
Speaker 2: Indeed, we focus on solving minor bottlenecks in our sugar kitchen and were able to produce sugar above our nominal capacity.
We focus on soybean minor bottlenecks gene our short of kitchen and what are they.
Able to produce sugar.
Our nominal bus.
Increasing our already large fleets QED.
Speaker 2: increasing our already large flexibility.
And this came up at a time when sugar commanded a premium or hydro sale of more than 50%.
Speaker 2: And this came at a time when Sugar commanded a premium over hydro-cetanol of more than 50%.
Speaker 2: we remain with our hedges open and very well positioned to continue taking advantage of this price opportunity.
We remain with our hedges to open them very well position to continue taking advantage of these price opportunities.
Speaker 2: Brazil is the most efficient country in the world in the production of sugar.
But actually it is the most efficient country the war in the production of sure.
Speaker 2: and we own one of the most efficient operations in Brazil and therefore in the world.
And we own one of the most efficient operations in Brazil.
Therefore in the war.
Let me turn off motto Russell, where our cluster is located allows us to meet all the year wrong maximizing our meeting time, while at the same time diluting our costs.
Speaker 2: The region of Mato Rosso's school where our cluster is located allows us to mill all the year round, maximizing our milling time while at the same time diluting our cost.
We are very proud of our operational teams or the constant search also efficiencies and opportunities to expand our production.
Speaker 2: We are very proud of our operational teams for the constant search of efficiencies and opportunities to expand our products.
Speaker 2: Now let's move into our farming business in Argentina and Europe .
Now, let's move into our farming business in Argentina and Uruguay.
Speaker 2: As you already know, this year we experienced the worst drought in history.
As you already know this year, we experienced the worst route in history.
This will have an impact you know what do we sell it.
Speaker 2: But during the year, we focus on strengthening efficiencies across all of our operations, finding saving opportunities to mitigate the impact of COVID-19.
But during the year, we focus on strengthening efficiencies across all of our operation binding saving opportunities to mitigate.
Speaker 2: In the crop business, our results were significantly affected by the drought, as we mentioned in the past releases.
In the crop business.
Our results were significantly affected by that at all.
As we mentioned in the bus with this but this is now behind us.
Speaker 2: We are starting fresh with the 2324 campaign.
We are starting fresh with the 'twenty three 'twenty four campaign.
Speaker 2: All of our teams are fully focused on planting a team.
Our teams are fully focused on planting.
Which are being conducted and the excellent conditions.
Speaker 2: which are being conducted under excellent conditions.
El Nino weather event that we have been talking about four months is now here.
Speaker 2: El Niño weather event that we have been talking about for the past month is now here.
Speaker 2: and has improved soil humidity across all of our productive reeds.
<unk> has improved so maybe I could ask all of our productive regions.
We already know Nixon and situation to maximize yields in all our clubs and go back to normalized EBITDA levels for this segment.
Speaker 2: We are in an excellent situation to maximize yields in all our crops and go back to normalize every levels for this segment.
In the case of our rice business.
Speaker 2: In the case of our Bryce business, we are achieving even better results than last.
We are achieving even better results than last year.
Speaker 2: A big part of this was thanks to the decision we made last year to set the foot in Uruguay by acquiring rice meat.
A big part of this was thanks to the decision we made last year to set their 14 euro white by acquiring right Smedes.
The Salford greater sustainability door global operation and provided us with more commercial doors.
Speaker 2: This offered greater sustainability to our operations and provided us with more commercial tools. We are entering into new markets offering clients customized varieties of high quality rice developed in our own seed unit and full product traceability.
We are entering into new markets offering clients that's the lifeblood.
High quality rice.
In our own seed and full product right.
This meant that our mix of higher value added products is allowing us to more premium on top of the high low what rice prices.
Speaker 2: This better mix of higher value-added products is allowing us to book premium on top of the high global price price.
In terms of the 'twenty three 'twenty four campaign.
Speaker 2: In terms of the 23-24 campaign, water reservoirs recovered thanks to the rains received.
What the reservoirs recover.
To the range we see.
Speaker 2: So we have the necessary water levels to secure a successful campaign. So far, we have already planted 80% of our plant.
So we have been necessarily what that leverage to secure a successful campaign.
So far we have already planted 80% of all of them.
In our legacy business.
We are achieving results in line with last year.
Speaker 2: We are achieving results in line with last year. The impact of the drought was mainly seen in higher costs of feed.
Impact of the drought was mainly seen in higher cost feed.
However, we were able to mitigate these with a record high productivity levels, you know what a fully populated pretty starts.
Speaker 2: However, we were able to mitigate this with a record high productivity levels in our fully populated period.
Also having the flexibility to sell into the domestic and export market and switch production from one to the other.
Speaker 2: Also, having the flexibility to sell into the domestic and export market and switch production from one to the other was key during this month of lower powder milk price.
Well ski during this month.
No word powder milk prices.
Speaker 2: Regarding our land portfolio, during the quarter we sold the farm in Argentina for more than 20% above our independent operation and with a very attractive IRR.
Regarding our land portfolio.
The quarter, we sold a farm in Argentina for more than 20% above our independent operation and with a very attractive IRR.
A quick note on ESG.
Speaker 2: A quick note on ESG. As we always say, since inception, we have been focused on developing sustainable production models in the interior of the countries where we operate.
We always say.
Since inception, we have been focused on developing sustainable braccio mothers Indian P deals all the countries, where we operate.
Speaker 2: Part of the work we have been doing with our ESC committee is to better communicate how we create value from an economical, environmental and social point of view under a robust corporate governance model.
Bulk of the work we have been doing with our ESG Committee is to better communicate how we create value from an economic environmental and social point of view and a robust corporate lower not smaller.
Speaker 2: We are proud to see that our work is paying off and ESC rating agencies like Sustainalytics rank us among the leading players in our industry. In the meantime, we continue making progress in our company.
We are proud to see that our water is paying off.
<unk> rating agencies like sustained analytics.
Grant us among the leading players in our team.
In the meantime, we continue making progress in our operations.
For example, in our production of bio methane.
Speaker 2: For example, in our production of biomethan, which we are already using to power more than 130 vehicles, replacing diesel consumption.
Which we are already using to power more than having a third debate.
Replacing diesel consumption.
Finally in terms of distribution.
Speaker 2: Finally, in terms of distribution, we are complying with our policy, always maintaining our debt levels below two times a BDA. Next week, on November 24, we will be paying the second installment of our cash dividend.
We are complying with our policy always Monday evening, our leverage below two times EBITDA.
Next week on November 24, we will be paying the second installment of our cash dividend.
Speaker 2: This represents an annual dividend of $35 million or 33 cents per share.
This represents an annual dividend of $35 million or <unk> 33 per share.
On top of the $24 million, we have already invested in share repurchases. This year.
Speaker 2: on top of the $24 million we have already invested in share rate purchases this year. To conclude, I want to
To conclude I want to thank our team.
Speaker 2: It is because of your hard work and effort that despite the very challenging start of the year, we are managing to end it with a very positive outlook ahead.
Is this because of your hard work and effort that despite a very challenging start of the year. We are managing to end it with a very positive outlook.
Speaker 1: Thank you to our shareholders for your continued support. Now I will let Emilia walk you through the numbers of the work. So I don't make any noise, but if you need anything, I'm here. Okay?
Thank you our shareholders for your continued support.
Now I will let maybe I'll walk you through the numbers for that one so I don't make any noise, but.
Do you need anything I'm here okay.
Speaker 2: $188 million during the third quarter, making a 2% year-over-year increase, while on an accumulated basis it reached $1 billion, 7% higher than the previous year.
We had an $88 million during the third quarter.
At 2% year over year increase while on an accumulated basis, it will reach $1 billion, 7% higher than the previous year.
This was mostly explained by greater productivity indicators in our sugar ethanol and energy division, which enabled us to increase our sugar production and execute sales and solid prices, coupled with higher average selling prices in our rice and dairy businesses.
Speaker 3: This was mostly explained by greater productivity indicators in our sugar, ethanol and energy division, which enabled us to increase our sugar production and execute sales at solid prices, coupled with higher average selling prices in our rice and dairy business.
In addition during September we completed the sale of William Indiana Farm for a setting price over $48 million fully collected at the closing date.
Speaker 3: In addition, during September , we completed the sale of El Medellin farm for a setting price of $48 million fully collected at the closing date.
Consequently, adjusted EBITDA reached $155 million during the quarter, whereas year to date it stood at $381 million.
Speaker 3: Consequently, Adjustity BTA reached 155 million dollars during the quarter, whereas here today it's to that 381 million dollars, 27% and 16% higher than its respective previous period.
97% and 16% higher than its respective previous periods.
Now please turn to slide five and direct your attention to our production figures.
Speaker 3: Now please turn to slide 5 and direct your attention to our production figures.
Speaker 3: As you can see on the bottom right chart, crushing volumes in our sugar, ethanol and energy business were up 31% on a year-to-date basis. Higher crushing translates into higher production volume, which drives sales at the same time as it dilutes costs.
As you can see on the bottom right chart crushing volumes in our sugar ethanol and energy business were up 31% on a year to date basis.
Crushing translates into higher production volume, which drives sales at the same time as it dilutes costs.
This was mostly possible thanks to the implementation of innovative agricultural techniques, such as pretty sprouted sibling, which enable us to rip reduced sugar cane varieties that have better performance, both in yields and Trs content in our regions on.
Speaker 3: This was mostly possible thanks to the implementation of innovative agriculture techniques.
Speaker 3: such as pre-sprouted seedling, which enable us to reproduce sugar cane varieties that have better performance both in yields and TRS content in our region.
Speaker 3: On the other hand, total production in our farming division reported a 29% year-over-year reduction, mostly explained by the reduction in yields and planted area in our crop segment because of La Niña weather events.
On the other hand.
Total production in our pharma division reported at 29% year over year reduction.
Mostly explained by the reduction in yields in planted area in our crops segment because of linear weather event.
Speaker 3: Let's move ahead to slide seven with the operational performance of sugar ethanol and energy.
Let's move ahead to slide seven with the operational performance of sugar ethanol and energy business.
During the third quarter, we marked a new record in crushing volume of $4 5 million tons, 20% higher versus the prior year.
Speaker 3: During the third quarter, we marked a new record in crushing volume of 4.5 million tons, 20% higher versus the prior year.
Speaker 3: This was mostly driven by solid productivity indicators such as yields, which presented a 27% year-over-year improvement to 82 tons per hectare during the quarter, while TRS content increased 3% to 145 kilograms per ton.
This was mostly driven by solid productivity indicators, such as yields which presented a 27% year over year improvement to 82 tons per hectare during the quarter, while the Trs content increased 3% to 145 kilograms per ton.
Speaker 3: In terms of mix, we diverted as much as 49% of our TRS to sugar, in line with our strategy to maximize production of the product with the highest marginal contribution.
In terms of mix, we diverted as much as 49% of our Trs to sugar in line with our strategy to maximize production of the bird with the highest marginal contribution.
Speaker 3: In fact, throughout the quarter, we were able to produce more sugar than our nominal industrial capacity, thanks to small adjustments made in our sugar kitchen to reduce bottlenecks, and benefit from the high TRS per hectare and profit from this price scenario. Consequently, sugar production reached 320,000 tons during the quarter, making a new record for our meal.
In fact throughout the quarter, we were able to produce more sugar than our nominal industrial capacity.
Two small adjustments made in our sugar kitchen to reduce bottlenecks and benefit from the high Trs per Hector and profit from this price scenario. Consequently.
Sugar production reached 320000 tons during the quarter, making a new record for our mills.
Within our ethanol production, 96% was hydro, which can be dehydrated at any time and turn into anhydrous ethanol and be sold either domestic or export markets wherever the price premium is great.
Speaker 3: Within our ethanol production, 96% was hydrated.
Speaker 3: which can be dehydrated at any time and turn into anhydrous ethanol and be sold either to the domestic or export markets wherever the price premium is great.
Speaker 3: On a year-to-date basis, crushing volume reached 9.6 million tons, 31% higher year-over-year. As mentioned before, this is mostly explained by a significant improvement in yields and TRS content, as well as to greater sugarcane availability, which enabled us to resume our continuous harvest model during the first quarter of 2023.
On a year to date basis crushing volume reached $9 6 million tons.
31% higher year over year as mentioned before this is mostly explained by a significant improvement in yields and Trs content as well as to greater sugarcane availability, which enabled us to resume our continuous harvest model during the first quarter of 2023.
Speaker 3: The reaction mix stood at 48% sugar and 52% ethanol on a year-to-date basis. As shown in the bottom right chart, while we maximized sugar production throughout the first nine months of the year to profit from the rally in global sugar prices, last year we maximized ethanol during the first semester and switched to sugar during the third quarter as ethanol prices decreased.
Production mix stood at 48% sugar and 52% ethanol on a year to date basis.
In the bottom right chart, while we maximize sugar production throughout the first nine months of the year to profit from the rally in global sugar prices.
Year, we maximize ethanol during the first semester and streets to sugar during the third quarter as ethanol prices decrease.
This proves the high degree of flexibility of our meals.
Speaker 3: This proves the high degree of flexibility of our meals.
Speaker 3: Let's please turn to slide A, where we would like to describe our sales conducted throughout the year.
Let's please turn to slide eight where we would like to describe our sales conducted throughout the year.
Speaker 3: Net sales amounted to $190 million during the quarter and $471 million year-to-date, making a 17% and 16% 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.
Net sales amounted to $190 million during the quarter and four.
$471 million year to date, making up 17% and 16% 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 Netherlands savings.
Speaker 3: As you can see on the top left chart, selling volumes of sugar amounted to 546,000 tons year-to-date, as our mixed decision favored sugar production to capture the significant price premium over ethanol. Consequently, our average selling prices increased 20% versus the prior year.
As you can see on the top left chart selling volumes of sugar amounted to 546000 tons year to date.
Our mixed decision favored sugar production to capture the significant price premium over ethanol. Consequently, our average selling prices increased 20% versus the prior year.
In the case of ethanol we.
Speaker 3: In the case of ethanol, we made the commercial decision to reduce sales and build stocks as prices have decreased due to high supply levels in Brazil.
Made the commercial decision to reduce sales and build stocks as prices have decreased due to high supply levels in Brazil.
Speaker 3: In addition, it must be recognized that the year-over-year comparison is not fair, as in April 2022, we took advantage of a market opportunity that ethanol offers and solar production at very attractive prices.
In addition, it must be recognized that the year over year comparison is not fit as in April of 2022, we took advantage of a market opportunity that ethanol offer and solar production at very attractive prices.
Speaker 3: It is worth highlighting that within the volume sold year to date, we exported 29,000 cubic meters at an average price of 19.6 cents per pound of sugar equivalent. This is so since we have the necessary certifications and industry capacity to meet product specifications.
It is worth highlighting that within the volumes sold year to date, we exported 29000 cubic meters at an average price of $19.06 per pound of sugar equivalent.
This is so since we have the necessary certifications and industry capacity to meet product specifications.
On an accumulated basis energy selling volumes increased 14% compared to the prior year, but the average selling price decreased by 9% due to low energy spot prices.
Speaker 3: On an accumulated basis, energy selling volumes increased 14% compared to the prior year. But the average selling price decreased by 9% due to low energy spot price.
Speaker 3: Regarding carbon credits, we sold $2 million worth of survivors during the quarter, making a 33% year-over-year increase on higher average selling prices, which fully offset the lower volume of survivors issued on lower ethanol.
Regarding the carbon credits, we sold $2 million worth of <unk> during the quarter.
<unk> at 33% year over year increase on higher average selling prices, which fully offset the lower volume of Soubirous issued on lower ethanol sales.
Year to date, we sold over 320000 survivors amounting to $6 million in sales.
Speaker 3: Yesterday, we sold over 320,000 survivors amounting to $6 million in sales.
Please go to page nine where we would like to present, the financial performance of the sugar ethanol and energy business.
Speaker 3: Please go to page 9 where we would like to present the financial performance of the sugar, ethanol and energy business.
Speaker 3: Adjusted EBITDA amounted to $115 million and $308 million in the third quarter and on an accommodated basis respectively.
Adjusted EBITDA amounted to $115 million mm $308 million during the third quarter and on a consolidated basis respectively.
Speaker 3: In both cases, the increase was mainly driven by hiring net save.
Cases, the increase was mainly driven by higher net sales.
Speaker 3: However, results were partially offset by a year-over-year loss reported in the mark-to-market of our commodity hedge position on higher global sugar prices.
However results were partially offset by a year over year loss reported in the mark to market of our commodity hedge position on higher global sugar price.
Speaker 3: 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. Assuming weather going normal, we maintain our expectation to increase 2023's crushing volume by 15% compared to 2022, as we have sufficient sugarcane availability to utilize in our industrial capacity.
Finally to.
To conclude with the sugar ethanol and energy business. Please turn to slide 10, we would like to briefly talk about the current outlook.
Assuming weather going normal we maintain our expectation to increase $22 three crushing volume by 15% compared to 2022, as we have sufficient sugarcane availability to utilizing our industrial capacity.
This in turn will result in a reduction in unitary cash costs due to better dilution of fixed costs.
Speaker 3: This, in turn, will result in a reduction in unitary cash costs due to better dilution of fixed costs.
Speaker 3: From a commercial point of view, sugar prices continue to be supported by strong fundamentals, and the closest contract is trading, on average, about 27 cents per pound.
Our commercial point of view sugar prices continued to be supported by strong fundamentals and the closest contract is trading on average about 27 cents per pound.
We are in an excellent position to profit from this scenario as we have 11% of our expected 2023 sugar production unhedged.
Speaker 3: We are in an excellent position to profit from this scenario as we have 11% of our expected 2023 sugar production unhedged. And for the 2024, 82% of our sugar position remains open.
For the 2024.
82% of our sugar position remains open.
In the case of ethanol part D of the pump currently stands at 62% pressured by greater Cana productivity in the center South region and limited storage capacity.
Speaker 3: In the case of ethanol, parity at the pump currently stands at 62 percent, pressured by greater gain of productivity in the central south region and limited storage capacity.
Speaker 3: Consequently, we expect prices to recover towards the end of the harvest season when the offer pressure is over and the demand is great.
Consequently, we expect prices to recover towards the end of the harvest season, when do you offer a breadth resolver and the demand is greater.
Speaker 3: For that reason, we are currently taking advantage of our ethanol tank storage capacity to carry over production into the following quarter.
That recent we are currently taking advantage or ethanol tanks storage capacity to carryover production into the following quarters.
Speaker 3: In the meantime, we are profiting from opportunities in the export market. Past the end of the third quarter, we sold 25,000 cubic meters of anhydrous ethanol to Europe . Now, we would like to move to the next part of the story.
In the meantime, we are profiting from opportunities in the export market.
Past the end of the third quarter, we sold 25000 cubic meters of anhydrous ethanol to Europe.
Now, we would like to move onto the farming business.
Please go to slide 12.
Speaker 3: As of the end of October 2023, we concluded harvesting activities related to our 2022-23 harvest season and produced over 800,000 tons of agricultural produce.
As of the end of October 2023.
We completed harvesting activities related to our 2022 223 harvest season, and produced over 800000 tonnes of ore without subsidies.
Speaker 3: has previously stated, yields for most of our summer crops presented a significant decline compared to the prior campaign because of La Niña, Guadalupe.
Obviously stated yields for most of our summer crops presented a significant decline compared to the prior campaign because of linear weather event.
On the other hand planting activities for 2023, 24 campaign and currently underway and we expect a positive outlook as weather has shifted to anemia.
Speaker 3: On the other hand, planting activities for our 2023-24 campaign are currently underway and we expect a positive outlook as weather has shifted to El Nino.
Recent rains registered in almost all of the productive regions of Argentina, and Uruguay has allowed for an improvement in soil moisture and recovery of water reservoirs.
Speaker 3: Recent rains registered in almost all the productive regions of Argentina and Uruguay has allowed for an improvement in soil moisture and recovery of water reservoirs favoring planting activities for our summer crops.
During planting activities for our summer crops.
Speaker 3: Consequently, we see a potential upside in planting area for rice, as well as full recovery in adjusted EVDA generation in our crops business in 2024, since there is no long-term impact in our earnings potential from the past dry weather.
<unk>, we see a potential upside in plant Gary out for rice as well as full recovery adjusted EBITDA generation in our crops business in 2024.
There is no long term impact.
<unk> potential from the bus ride with them.
On the following page 13.
Speaker 3: On the following page 13, we would like to present the financial performance of our farming and land transformation business.
Would like to present, the financial performance of our farming and land transformation businesses.
Speaker 3: Adjusted EVDA totaled $47 million in the quarter, making a $30 million year-over-year increase.
Adjusted EBITDA totaled $47 million in the quarter make.
Making a $30 million year over year increase.
Speaker 3: Here today, adjusted VDA was 90 million, 23 percent higher than the previous year. In both cases, this was explained by an outperformance from our rice division, coupled with the sale of Almediano farm, which in turn fully upset the weak performance of crops and from the dairy business.
Year to date, adjusted EBITDA was 90 million, 23% higher than the previous year in.
In both cases this was explained by an outperformance from our Rice division, coupled with the sale of <unk>, which in turn fully offset the weak performance of crops from the daily business, starting with our crop business adjusted EBITDA amounted to $98000 and 600.
Speaker 3: Starting with our crop business adjusted ETA amount to $98,000 and $607,000 during the third quarter and first nine months of the year respectively. As previously explained, results were mainly impacted by the reduction in yields coupled with a genuine increase in costs in dollar terms and a reduction in planted area versus the previous season.
$7000 during the third quarter and first nine months of the year respectively.
<unk> explained results were mainly impacted by the reduction in yields coupled with a genuine increase in cost in dollar terms and a reduction in planted area versus the previous season.
Adjusted EBITDA in our rice business was $11 million in the third quarter and $38 million on an accumulated basis. This was driven by an increase in the average selling price due to a better mix of higher added value products and higher global prices, which in turn fully offset the reduction in yields in the <unk>.
Speaker 3: Adjusted EVDA in our rice business was $11 million in the third quarter and $38 million on an accumulated basis. This was driven by an increase in the average selling price due to a better mix of higher added value products and higher global prices, which in turn fully offset the reduction in yields and the increasing costs in dollar terms.
<unk> costs in dollar terms.
It is worth highlighting that India, the world's largest ratio supported and the export of long range White rice to secure domestic supply. Consequently, we expect to continue capturing these higher prices in the short to midterm as demand shifts to South American rice due to limited supply formation.
Speaker 3: It is worth highlighting that India, the world's largest rice exporter, banned the export of long-range white rice to secure domestic supply. Consequently, we expect to continue capturing these higher prices in the short to mid term as demand shifts to South American rice due to limited supply formation.
<unk> countries.
Moving on to the dairy business adjusted EBITDA totaled $6 million.
Speaker 3: Moving on to the dairy business, adjusted the VDA total $6 million, 33% lower than the prior year, while year to date it's to that $23 million, making a 4% year over year reduction.
33% lower than the prior year, while year to date, it stood at $23 million, making up 4% year over year reduction.
Speaker 3: Results were explained by higher average selling prices, as we produced more fluid milk for the domestic market, which offered the highest marginal contribution during this period, coupled with our continuous focus on achieving efficiencies in our vertically integrated operations. However, these results were partially offset by higher costs in dollar terms, especially cow feed.
Results were explained by higher average selling prices as we produce more fluid milk for the domestic market, which offer the highest marginal contribution during these periods coupled with our continuous focus on achieving efficiencies in our vertically integrated operations. However, these results were partially offset by <unk>.
<unk> costs in dollar terms, especially cold feet.
During September 2023, we completed the sale of <unk> located in the province of Buenos Aires, Argentina for a selling price of $48 million, which was fully collected at the closing date.
Speaker 3: During September 2023, we completed the sale of El Meridiano Farm, located in the province of Buenos Aires, Argentina, for a selling price of $48 million, which was fully collected at the closing date.
I would like to point out that the farm was sold at a 29% premium to the 2020 to cushman and Wakefield independent farmland appraisal.
Speaker 3: I would like to point out that the farm was sold at a 29% premium to the 2022 Cushman and Wakefield independent farmland appraisals.
Speaker 3: Let's now turn to page 15, where we would like to present our capital allocation strategy.
Let's now turn to page 15, where we would like to present, our capital allocation strategy.
Speaker 3: As a way of reminder, during 2022, we generated $141 million of net cash from operations.
As a way of reminder, during 2022, we generated $141 million of net cash from operations.
Speaker 3: According to our distribution policy, we are committed to a minimum distribution of 40% of the cash generated during the previous year via a combination of cash difference and share repartee.
According to our distribution policy, we are committed to a minimum distribution of 40% of the cash generated during the previous year via a combination of cash dividends and share repurchases.
Speaker 3: In terms of dividends, on November 24th, we will make our second cash dividend payment of $17.5 million, which represents approximately 16 cents per share. The first installment was paid on May 24th in an equal cash amount resulting in an annual cash dividend of $35 million.
In terms of dividends on November 24th we will make our second cash dividend payment of $17 5 million.
Which represents approximately 16 this year.
Firstly assortment was paid on may 24th in an equal cash amount, resulting in an annual cash dividend of $35 million.
Speaker 3: In addition, we have already repurchased $24 million in shares here today, which represents approximately 2.4% of the company's equity.
In addition.
We have already repurchased $24 million in shares year to date, which represents approximately two 4% of the company's equity.
Moving on to our debt position, our net debt amounted to $707 million, making up 13% decrease compared to the same period of last year, and a 17% quarter over quarter reduction.
Speaker 3: Moving on to our debt position, our net debt amounted to $707 million, making a 13% decrease compared to the same period of last year and a 17% quarter over quarter reduction.
Speaker 3: This was explained by our net cash from operations generated during the last 12 months and the company's financial strategy, which in turn enabled us to reduce our net debt position while also attending our distribution policy and growth project.
This was explained by our net cash from operations generated during the last 12 months on the company's financial strategy, which in turn enabled us to reduce our net debt position, while also attending our distribution policy and growth projects.
As of September 32023.
Speaker 3: As of September 30, 2023, our liquidity ratio reached 1.8 times, showing the company's full capacity to repay short-term debt with its cash balances, whereas our net leverage ratio was 1.5 times, 0.6 times down compared to the previous year.
Our liquidity ratio reached one eight times showing the company's capacity to repay short term debt with its cash balances, whereas our net leverage ratio was one five times one.
Six times down compared to the previous year.
To conclude.
Speaker 3: 28% of total CAPEX invested throughout the quarter was destined to expansion projects. Investments on this front were mostly related to continue increasing our sugarcane plantation and the construction of our second biodigester in Brazil.
28% of total Capex invested throughout the quarter was testing two expansion projects investments on this front will mostly related to continue increasing our sugarcane plantation and the construction of our second buyer digestion in Brazil. Once concluded the ladder, we nevertheless to increase our current biogas production.
Speaker 3: Once concluded, the latter will enable us to increase our current biogas production, which is then converted into biomethane and used to replace our diesel consumption. As of today, we have over 120 lightweight vehicles adapted and running with biomethane, as well as other eight heavyweight vehicles.
Action, which is then converted into biomethane and used to replace our diesel consumption as of today, we have over 120 lightweight vehicles adapted and running but with Biomethane.
As well as other eight heavyweight vehicles.
Speaker 3: In our farming division, we have renewed our cheese production line in Mortero's facility. Investments made will contribute to accessing new markets and clients through the production of other types of semi-hard and hard cheeses, while simultaneously decreasing the amount of waste generated throughout the entire production.
In our pharma division.
We have renewed our cheese production line in North Dallas facility.
Investments made will contribute to accessing new markets and clients through the production of other types of semi part and hard cheeses, while simultaneously decreasing the amount of waste generated throughout the entire production process.
Thank you very much for your time, we are now open to questions.
Speaker 3: Thank you very much for your time. We are now open to questions.
Thank you the floor is now open for questions. If you have a question. Please write it down in the Q&A section click on raise hand for audio questions.
Speaker 1: Thank you. The floor is now open for questions. If you have a question, please write it down in the Q&A section or click on raise hand for audio questions. Please remember that your company's name should be visible for your question to be taken. We do ask that when you pose your question that you pick up your headset to provide optimum sound quality. Please hold while we pull for questions.
Please remember that your company's name should be visible for your question to be taken we do ask that when you close your question that you pick up your headset to provide optimal sound quality.
Please hold while we poll for questions.
Our first question comes from Thiago Duarte from BTG backdrop your microphone is open.
Speaker 1: Our first question comes from Tiago Duaggi from Bétegé-Pactuel. Your microphone is open.
Okay.
Hi, Hello, everybody thanks for the opportunity.
Speaker 4: for the opportunity. Yeah, two questions on our side here. The first one is with regards with the evolution of, the crushing pace in the sugar, ethanol and energy business and particularly looking at the evolution of the productivity, which has been really strong this year. And so the question is really about whether you see upside risks in the sugar industry.
Two questions on our side here.
The first one is with regards with the evolution of.
The crushing pace in the in the sugar ethanol and energy business.
And particularly looking at the evolution of the productivity.
Which has been really strong this year and and so the question is really about whether you see upside risk.
Speaker 4: to the 15% increase in crushing volumes that you have guided for the year, because it does seem like you have.
The 15% increase in crushing volumes that you have guided for for the year because it does seem like you have a lot more.
Speaker 4: raw material available to crush, then only 15% increase. And obviously, if you're keeping the 15% increase, whether we should be seeing more cane being carried over into the next crop, and whether...
Raw material available to crush.
Then then only 15% increase in and obviously, if you're keeping the 15% increase whether we should be seeing more cane.
Being being carried over into the next crop and weather.
Speaker 4: we could see a bigger crushing next year relative to around 12 million tons this year. So that would be the first question.
We could see.
A bigger crushing next year relative to around 12 million tons. This year, so that would be the first question.
Speaker 4: And the second one is also on the sugar business.
And the second one is also on the on the sugar business.
Speaker 4: Uh, we have, we have started to see, you know, different players.
We have we have started to see you know different players.
Speaker 4: uh announcing uh different sorts of investments in order to increase their capacity to produce sugar uh or to increase their sugar mix as opposed to ethanol um and and obviously with sugar prices trading where they are relative to ethanol it does seem to make sense even for for some meals that historically haven't made much sugar so the question is whether you guys are considering the possibility of doing the same
Announcing.
Different sorts of investments in order to increase their capacity to produce sugar.
Or to increase their sugar mix as opposed to ethanol.
And obviously with sugar prices trading where they are relative to ethanol. It does seem to make sense even for for some mills that historically haven't made much sugar. So the question is whether you guys are considering the possibility of doing the same.
Speaker 4: And obviously, whatever you can share with us with that regard, that would be great to hear as well. Thank you.
And obviously whatever you can you can share you can share with us with that regard that would be great to hear as well. Thank you.
Speaker 5: Hi, Diego. How are you? Thank you for your question. Renato will take your first question and then I will take the second one. Renato, regarding the evolution of crashing and the upside of this...
How are you. Thank you for your question.
Right now we'll take your first question and then I would take the second one.
Right.
Regarding the evolution of crushing.
The upside base.
Speaker 6: compared to the 15% we already guided. OK, hi, Chuck. Thank you.
Compared to the 19%.
Already guided.
Okay, Hi, chocolate. Thank you. Thanks for your question.
Speaker 7: I think the weather this year has been very good. We are not seeing periods of excess nor lack of moisture in the soil. So this is very good for crushing. So we are crushing. Our crushing pace is doing pretty well. And also, the perspective of the youth are really good to.
If you go out there this year is being very boots.
We are not seeing periods of SaaS more mark of moisture in the soil. So this is very good for crushing so where corrosion.
Our crushing basis.
Pretty well.
And also the perspective of the yields are really go through.
Speaker 7: So we are confident that we are going to achieve this 15% more crushing compared to last year.
So.
We are confident that we are going through to achieve these 15.
More crushing compared to last year.
Speaker 7: Regarding the risk of crushing more than 15%, I think it's possible, but of course it depends on the use of time in the last quarter. Last quarter is always difficult to predict the use of time. So considering historical use of time, we should be crushing 15% more again than last year.
Regarding the reusable grocery margin than 15%.
Possible, but of course it depends on the use of time in the last quarter.
Last quarter as always.
Difficult to predict the use of time, so considering our historical use of time, we should be crushing 15.
<unk>.
Margin domestic leader.
Speaker 7: And we think that we are going to be in a very good position to crush in the first quarter of next year. I think the sugar cane looks good.
I mean, we think that we are going to be in a very good position to growth in the first quarter of next year.
The sugarcane looks good looks very good so.
We will be I would say.
They plan on Amdocs sugarcane tribute crushed.
Thanks Carter.
In the first quarter.
Speaker 7: So that's the first question.
So that's the first.
Question.
And.
Speaker 5: And regarding the second question, Thiago, we've been making small investments during the full year, and as you can see, every quarter we are increasing the amount of sugar that we are producing on the mix.
And regarding the second question Thiago.
We've been making small investments during the full year and as you can see every quarter. We are increasing the amount of sugar that we are producing on their mix. So we are going to end up on up to 52% of sugar of the total.
Speaker 5: So we are going to end up on up to 52% of a sugar of the total TRS. And so this year, we are very optimistic on achieving these numbers that are above the nominal capacity.
Drs.
So.
This year, we are very optimistic on.
<unk> these numbers that are above the.
The nominal capacity.
Speaker 5: When you hear the other guys building sugar factories, it's because they don't have any sugar factory. We do have sugar factory in all our meals.
When you hear the other guys building sugar factory is because they don't have any issue about a factory. We do have sugar factory in all of our meals. So what we are doing is increasing modestly nardi, there, but PV deal.
Speaker 5: So what we are doing is increasing marginally the productivity of each one of the factories.
Each one of each one of them of their factory. So for next year, we can still see an increase of the sugar.
Speaker 5: So for next year, we can still see an increase of the sugar production, of the total sugar production because of this increase that Renato was talking about and because of maximizing sugar since the very beginning. So what we are investing is on making the process of our sugar factory work.
The action of the total sugar production because of this increase out there, but not the we're talking about and because of maximizing sugar.
Since the very beginning so what we are investing Nissan making their process of ours, who are five study work, but I think the win all.
Speaker 5: perfectly well all the year round for next year. That's where we are today regarding the sugar mix investment.
All the year round for next year, that's where we are today regarding the sugar mix investments.
Speaker 4: Perfect. Thank you. And just to follow up on Renato's comments, are you guys ready to...
Perfect. Thank you and and and just a follow up on all hang out those comments are you guys ready to.
Speaker 4: sort of point or guide towards an additional increase in sugarcane volumes into next year. Would that be reasonable or feasible to think relative to this year?
Sort of I don't know point or guide towards an additional increase in sugarcane volumes into next year would that be.
Reasonable or feasible to think relative to this year.
Speaker 5: Yes, we think that that's a reasonable relative to this year. Of course, as Renato explained, our sugar crashing is variable according to the use of time of the sugar means, but assuming whether going normal.
Yes.
We think that that's the reason.
Relative to this year of course as said Renato explained.
Our assure crushing his body according to the.
Use of time of the huge armies, but assuming weather normal we should have an increase of at least 5% maybe up to 10%.
Speaker 5: we should have an increase of at least 5% and maybe up to 10%.
Speaker 5: when we compare to this year, and that's something that if we continue to do the same thing that we've been doing, we can certainly be there.
When we compare to the here.
Think that if we continue to do the same thing that we've been doing we can certainly be there.
That's very helpful. Thank you Mariano.
Next question from Rod just have that is from <unk> BBA you can activate your microphone.
Speaker 1: Next question from Ladisa Perez from Itau BB8. You can activate your microphone.
Good afternoon can you hear me all right.
Yes perfectly well.
Speaker 1: Okay. Thank you, Mariano. Hi, everyone. Thank you for taking our questions, and congratulations once again on the very strong results.
Okay.
Thank you Mariano.
Hi, everyone. Thank you for taking our questions and congratulations once again on the very strong results.
Speaker 1: I have two questions on the sugar and ethanol side. First, I was wondering if you could provide us some more perspectives on your forecasted ticky stocking phase, particularly for ethanol. I mean, in other words, what should we expect?
I have two questions on the sugar and ethanol side.
First I was wondering if you could provide us some more perspective on your forecasted destocking base, particularly for ethanol I mean in other words, what should we expect in terms of selling volumes for the next quarter and in that context. I was wondering if you could provide us some color on your storage capacity for ethanol.
Speaker 1: in terms of selling volume for the next order. And in that context, I was wondering if you could provide us some color on your storage capacity for ethno.
Speaker 1: or if you currently have enough storage capacity, or if you're having to leave third party storaging facilities. And how do you think that compares to your?
If you currently have enough storage capacity or if youre, having to lease third party storage facilities and how do you think that compares your regional peers.
Speaker 8: My second question would be on capital allocation as well. I remember that a couple of months ago we discussed the possibility of the company increasing its planted area in Mato Grosso Sul, giving a strong outlook ahead for the sector, and I was wondering if you have any updates on that front that you can share with us right now. I mean, if an agro were to increase its sugarcane planted area, would that involve converting pasture land, or would you leave land already used for sugarcane? Something amongst that line. Thank you once again, and congratulations on the results.
My second question would be on capital allocation as well I remember that a couple of months ago. We discussed the possibility of the company increasing its planted area in North Dakota. So given the strong outlook ahead for the sector and I was wondering if you have any updates on that front that you can share with US right now I mean, if a backlog of work to increase it.
Trigger keen planted area would that involve converting pasture land or would you leave land already used for sugarcane something amongst that line. Thank you once again and congratulations on the results.
Thank you Lisa.
Speaker 5: Thank you, Larissa. Renato will take your first question and I will take the second one. So, Renato, do you want to clarify regarding...
But not always take your first question and I will take the second one so right.
<unk> do you want to clarify the gathering.
Speaker 5: the setting volumes of ethanol and storage capacity.
The setting volume self ethanol storage capacity.
Speaker 7: Hi, Lalisa. We think that the low pirate ratio at the pump now and the level of demand of ethanol that you have been seeing is going to increase this pirate towards the 7%. Probably we're going to see this in the next month.
Hi audience.
We think that the loan ratio at the pumps now.
And the level of demand of it and I'll go through have been seen as going through between grid.
Towards the 7%.
We went to cities in the next two months. So we are taking advantage of our all of our bank.
Speaker 7: So we are taking advantage of all our tank, tanks capacitance, and also we are leasing some tanks outside of our mills. So at this moment we have approximately 250,000 cubic meters of storage.
Composites and also we are.
Leasing some banks outside of our reviews so.
At this moment, we have approximately 250000 cubic meters.
Starts.
Speaker 7: So we will be feeling the market, how quick the price should go up to start selling our volume between the fourth quarter and the first quarter of next year.
So we will be.
Feeling.
The market how.
Sweet.
The price should go up to start selling our hour.
Volume.
Between the fourth quarter and the first part of next year.
Okay.
Thank you.
Speaker 5: Renato, that is regarding the capital allocation and the plant is area.
Right.
That is a regarding the capital allocation and the plant is.
Area.
Speaker 5: Of course, within the growth project that we have, we've always indicated that growing the planting area or the amount of sugarcane that we produce in the cluster is probably the most efficient investment that we've been doing.
Of course within the growth projects that we have we've always indicated that growing the landing <unk> out of the amount of sugarcane that we produce in the cluster.
Is probably the most efficient investment that we've been doing and as we've been growing.
Speaker 5: And as we've been growing, we are able to lease land mainly from pasture land. One of the advantages that we have is that we don't have competition in sugarcane land.
We are able to lease land mainly for robust year alone one of the advantages that we have is that we don't have competition in sugarcane land.
Speaker 5: with other sugar mills because of our specific location or the competition is very low. So in general when we plant new sugar cane, we convert pasture land into sugar cane. That's basically what we've been doing. This year 2023, we are planting 8,000 hectares of new planted hectares being specific on answering your question.
With other <unk> because of our specific location or the competition is very low so in general when we planned new sugarcane, we combat pasture land into sugarcane, that's basically what we've been doing this year 2023, we are planting eight felt that hectares of new.
Planted hectares being specific on answering your questions.
That was super clear thank you.
Once again, if you have a question. Please read it down into Q&A section Oracle icon raise hand for audio questions. Please hold while we poll for questions.
Speaker 1: Once again, if you have a question, please write it down in the Q&A section or click on Raise Hand for audio questions. Please hold while we pull for questions.
For the written questions I'll pass the floor over to Victoria Investor Relations Officer.
Speaker 1: For the written questions, I'll pass the floor over to Victoria, investor relations officer.
Okay.
Speaker 9: We received a question from Julia Rizzo from Morgan Stanley , and she asks, I would like to ask about next year crushing and mix. Sugar production could go as much as the 3,020.
We received a question from Giulia <unk> from Morgan Stanley and she asks.
I would like to ask about next year crushing and mix shift.
Production could go as much as the 3000 and <unk>.
<unk>.
Speaker 9: that I'm 30 can read times four quarters.
And until we can rake 10 four quarters.
Basically is it possible that each quarter, we could see the same record volume of sugar production than we did last quarter.
Speaker 9: Basically, is it possible that each quarter we could see the same record volume of sugar production than we did this quarter?
Speaker 5: Okay, I can take directly the question. As Renato explained very clear, the crashing volume that we are already expecting for 2024 is between 5 to 10% more than this year.
Okay, Yeah, I can take directly to your question.
As Renato explained very clear the crushing volume that we are already expecting for 2020 four east between 5% to 10% more than the say year.
Speaker 5: and regarding the specific amount of sugar that we can produce.
And regarding the specific amount of sugar that we can produce this quarter that we are announcing today.
Speaker 5: this quarter that we are announcing today, we produced this 320,000 tons of sugar. That is an absolute record because of all these investments and adjustments that we did that I also just mentioned.
Produce 320000 tons of sugar that is not.
<unk> totaled the record because of all these investments and adjustments that we need that.
Also Jeff mentioned doing that the fourth quarter I think it's too challenging mainly because of the amount of sugarcane that we had with every quarter.
Speaker 5: Doing that, the four quarters, I think it's too challenging mainly because of the amount of sugarcane that we harvest every quarter. The quarter that we are just finishing is usually the more dry quarter of our cycle.
That we are just finishing is usually the more dry quarter of our sites being dry means that we can be cut.
Speaker 5: Being dry means that we can be harvesting and milling all or most of the time. In all the other quarters, it's more difficult to reach that level or that amount of crushing days. That's why I see two challenging making 320.
<unk> nine, meaning all or most of their time in all the other quarters is more difficult to reach that level or that amount of.
Crashing base, that's why IC, two challenging making pretty kind of 'twenty can we lose 20% less yes, I think we can do 20% led by the by quarter, but we can repeat this same <unk> 20 for the same quarter of the next year and maybe the previous.
Speaker 5: Can we do 20% less? Yes, I think we can do 20% less by quarter, but we can repeat this same 320 for the same quarter of the next year.
Speaker 5: And maybe the previous quarter, the second quarter of the year is also a quarter that is usually more dry.
Quarter, the second quarter of the year. He saw its totally a quarter that is usually more of the right. So the two the SMS during winter time is.
Speaker 5: the semester during wintertime is...
Speaker 5: more used for having more sugarcane than the other quarter. That's basically the answer.
More.
Used for having modest sugarcane than the other quarters.
We believe the ads.
Speaker 1: This concludes the question and answer section. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks.
This concludes the question and answer section at this time I would like to turn the floor back to Mr. Bosch for any closing remarks.
Thank you everyone for joining today and we hope to see you in our next.
Speaker 5: Thank you everyone for joining today and we hope to see you in our next upcoming event.
The upcoming events.
Speaker 1: Thank you. This concludes today's presentation. You may disconnect at this time and have a nice day.
Thank you. This concludes today's presentation you may disconnect at this time and have a nice day.