Full Year 2023 Adecoagro SA Earnings Call

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Operator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's fourth quarter 2023 results conference call. Today with us we have Mr. Mariano Bosch, CEO, Mr. Emilio Gnecco, CFO, Mr. Renato Junqueira-Pereira, 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 a listen-only mode during the company's presentation.

Good morning, ladies and gentlemen, and thank you for waiting at this time, we would like to welcome everyone to our back log was fourth quarter 2023 results conference call.

Today with US we have Mr. Mariano Bosch CEO, Mr. Emilio nickel CFO, Mr. Matthews from Cade up at ETA, sugar ethanol and energy VP and Mrs. Victoria, <unk> Investor Relations Officer.

We would like to inform you that this event is being recorded and all participants will be in a listen only mode. During the company's presentation. After the company's remarks are completed there'll be a question and answer section at that time further instructions will be given.

Operator: After the company's remarks are completed, there will be a question and answer section, and at that time, further instructions will be given. Before proceeding, I should mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro's 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.

Before proceeding let me mention that forward looking statements are based on the beliefs and assumptions of a backlog with 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.

Operator: Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Adecoagro and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your presentation.

Investors should understand that general economic conditions industry conditions and other operating factors could also affect the future results of Bezeq quadro 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.

Mariano Bosch: Good morning, and thank you for joining Adecoagro's 2023 fourth quarter results conference. We are presenting all-time records in Gross Shales, Adjuste de Vida, and Net Cash on Operations. Despite having experienced the worst drought in Argentina's history, these accomplishments were possible because of the investment made through the years to grow our production capability, and strengthen our asset base and team.

Good morning, and thank you for joining other Glasgow.

Fourth quarter results conference.

We are presenting all time record.

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Adjusted EBITDA.

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Despite having expedia is the worst route you know didn't do enough history.

This accomplishment, what possibly be castle.

The investment made through the years to grow our production Okay Bobby.

Right now what else it base.

Mariano Bosch: The synergy is achieved across all our businesses, our continuous focus on efficiency and being the low-cost producer, our geographic and pro-diversification, and our flexibility to shift across markets and products. These results made us reduce our net debt by more than $150 million. While we continue investing in growth projects with attractive IRRs and also distributing to shareholders via dividends and buy-ins.

Yes.

<unk> achieved a kudos all our businesses.

Our continuous focus on efficiency on being the low cost producer.

Our geographic umbrella that you actually seek Asia.

A lot of flexibility to shift capital markets umbrella.

These results Meda will you our net debt by more than $50 million.

While we continue investing in growth projects with attractive idea. That's on also distributing to shareholders via DBM and <unk>.

Based on that research presented.

Mariano Bosch: And according to our distribution policy. This year, we will distribute at least $70 million, a new record for the company. Some brief comments on ESG. As Food and Renewable Energy Producers, taking care of natural resources and the environment is in our DNA.

And according to what are the recent policy.

This year, we will distribute at least $70 million a new record for the company.

Some brief Goldman yeah.

As food and renewable energy producers.

Taking care of their natural recurrence.

The environment, you see now what of DNA.

Mariano Bosch: Through the years, we have developed sustainable production models in each of the places where we operate. We expect to achieve our newly disclosed 2030 decarbonization target by reinforcing these models and investing in new technologies with attractive financial returns like biomethane in Brazil.

Throughout the years, we have developed sustainable production model in each of the places where we operate.

We expect to achieve our newly disclosed when he said the decarbonisation targets.

Reinforcing this model and investing in new technologies with attractive financial returns like they buy you might thought.

In Brazil.

Mariano Bosch: Our Angelica Mead has recently received the Corsia certification, which guarantees that our ethanol can be used for sustainable aviation fuel production, a potential new market for our ethanol production. In our daily segment, our second biodigester is injecting renewable electricity into the local grid by using cow manure as an ink. This is a clear example of how the circular economy model works. From this manure, we also produce biofertilizer, which is then used in our crop farm and later as cow feed. The ESG awards received during the year are another proof of our work and communication of best practice.

Our non JV Cummins has recently received the course, yesterday's Acacia which guarantees that our ethanol can be used for sustainable aviation fuel production.

A potential new markets what are what is on our products.

What do they do segment.

Our second boggle, they just started injecting renewable electricity to the locality.

By using called manure as honey.

This is a clear example of how she'll colada economy model works.

From this mine Europe, we also produced by up but if he likes it.

Which is then used in our crop farm.

That'll produce scout.

D E S T. A what we see during the year are another proof of the water communication of our best practices.

Mariano Bosch: Now, looking ahead. We are very enthusiastic about the prospects of all our operating sectors. Normal weather conditions in Argentina and Uruguay have favored the planting and development of over 270,000 hectares of grains and rice. In the case of crops, yields are being defined, and we feel confident that production will go back to normal levels, consequently showing a significant recovery in adjusted EVGA in 2024. Furthermore, our rice mills in Argentina and Uruguay are continuously processing and turning our rice production into higher-value-added products for our clients distributed all over the world. Having in place a fully integrated business model enables us to offer high quality rice at attractive prices.

Now looking ahead.

We are very enthusiastic about the outlook of all our operating segments.

Normal weather conditions in Argentina, and Uruguay, 30, before the planting and develop it over 270000 vessel great right.

In the case of growth you'd sort of being defined and we feel confident that.

Production will go back to normal levels.

Consequently, showing a significant recovery in <unk>.

EBITDA in 2020 four.

Furthermore, our rights meets in Argentina, and Uruguay are continuously processes and doesn't mean, our rice production into higher but you at least from what our clients distributed all over the world.

How do you mean place if fully integrated business model that enables us to offer high quality rice at that Brett.

Price.

Mariano Bosch: In the meantime, in Brazil, we are crushing cane and producing sugar thanks to our continuous harvest model. And we foresee to continue increasing our milling compared to the 2023 record crash. Assuming Weather, Evolving Norms.

In the Meanwhile, in Brazil, we are crushing pain and producing sugar.

Through our continuous harvest model.

And we foresee to continue increasing our really compare to the 2023 record crashing.

Assuming weather evolving Normandy.

Mariano Bosch: To conclude, I want to thank our teams for their hard work and effort. Although we had a difficult start to the year, we achieved these results, and the output remains very positive. Thank you to our shareholders for your continued support. Now I will let Emilio walk you through the numbers of the board. Thank you, Mariano. Good morning, everyone.

To conclude.

I want to thank our teams for their hard work on it for.

Although we had a difficult start to a year.

We achieved these results and the outlook remains very positive.

Thank you to our cordless for your continuous support.

Now I will let that means you will walk you through the numbers I'll take one.

Thank you Mariano good morning, everyone.

Emilio Federico Gnecco: Let's start on page four with a summary of our consolidated financial results. Gross sales totaled $400 million during the fourth quarter, 5% higher year-over-year, while adjusted EBITDA reached $96 million, 9% down versus the same period last year. On an annual basis, gross sales amounted to $1.4 billion, and adjusted BDA was $477 million, making a 7% and 10% increase, respectively, versus the prior year, as well as all-time records for the company. These results were mostly explained by an outperformance of the sugar, ethanol, and energy business on greater cane productivity, which enabled us to increase our sugar production and execute sales at solid prices. Results were also positively impacted by solid returns from our rice segment on higher average selling prices and the sale of a farm in September. This, in turn, fully offsets the decline reported in crop production explained by the effects of an unprecedented drought event and higher costs in dollars. Now, please turn to slide five.

Let's start on page four with a summary of our consolidated financial results.

Sales totaled $400 million during the fourth quarter, 5% higher year over year, while adjusted EBITDA reached 96 million, 9% down versus the same period of last year.

On an annual basis gross sales amounted to $1 4 billion and adjusted EBITDA was $477 million, making a 7% and 10% increase respectively.

Our year over year as well as our all time records for the company.

These results were mostly explained by an outperformance of the sugar ethanol and energy business on greater keen productivity, which enabled us to increase our sugar production and execute singed up solid prices.

Results were also positively impacted by solid returns from our rice segment on higher average selling prices and the sale of a farm in September.

This in turn fully offset the decline reported in the group's production explained by the effects of an unprecedented drought events and higher costs in dollars.

Now please turn to slide five.

Emilio Federico Gnecco: As you can see in the upper right chart, we generated $176 million of net cash from operations in 2023, 24% higher than the prior year. The increasing cash generation was driven by outstanding operational performance. Investments carried out throughout the past years across all our operations, along with an action plan that aimed to reduce expenses and generate savings, among other initiatives, have paid off.

As you can see on the upper right chart, we generated $176 million of net cash from operations in 2023.

24% higher than the prior year.

The increase in cash generation was driven by an outstanding operational performance investments carried out throughout the past years across all our operations along with an action plan, which aim to reduce expenses and generate savings and other initiatives are paid off.

Emilio Federico Gnecco: Regarding our production figures, in the bottom right chart, we can see that crushing volumes in our sugar, ethanol, and energy business were up 19% versus 2022. Higher crushing translates into higher production volumes, increasing sales, and diluting costs. This was mostly possible thanks to the implementation of innovative agriculture techniques, such as pre-sprayed seeding, which enabled us to reproduce sugarcane varieties that have better growth development in our region, both in yields and TRS content. On the other hand, total production in our farming division reported a 29% year-over-year reduction, fully explained by the reduction in yields and planted area in our crop segment because of the La Nina weather event. Let's move to slide seven with the operational performance of our sugar, ethanol, and energy businesses. During the fourth quarter, crushing volume reached 2.9 million tons, 7% lower versus the prior year due to higher rainfall received compared to the same period of last year. Regarding productivity, Yields reached 82 tons per hectare, whereas TRS content amounted to 127 kilograms per ton.

Regarding our production figures in the bottom right chart, we can see that crushing volumes in our sugar ethanol and energy business were up 19% versus 2022.

How your aggression translating into higher production volume, increasing sales and diluting costs.

This was mostly possible thanks to the implementation of Noah agricultural techniques.

Prescribed to Sydney, which.

Which enabled us to reduce sugar cane varieties that have better growth development in our region, both in yields and Trs content.

On the other hand total production farming division reported a 29% year over year reduction fully explained by the reduction in yields and planted area in our crops segment because of lending out weather event.

Let's move to slide seven with the operational performance of our sugar ethanol and energy business.

During the fourth quarter crushing volume reached $2 9 million tonnes.

7% lower versus the prior year due to higher rainfalls received compared to the same period of last year.

Regarding Peru DVD.

<unk> reached 82 tons per Hector, whereas Trs content amounted to 127 kilograms per ton.

Emilio Federico Gnecco: In terms of mix, we diverted as much as 52% of our TRS-2 sugar in line with our strategy to maximize production of the product with the highest marginal contribution. Furthermore, within our ethanol production, 72% was hydrous, as demand for this type of ethanol had been significantly increasing and gaining market share, offering the better margin. On a full year basis, the crushing volume reached 12.5 million tons, 19% higher year over year and a record for our meal.

In terms of mix, we diverted as much as 52% of our Trs to sugar in line with our strategy to maximize production of the product with the highest marginal contribution.

In our ethanol production, 72% was hydrous as demand for this type of ethanol has been significantly increasing and gaining market share offering the better margin.

On a full year basis, crushing volume reached $12 5 million tons, 19% higher year over year and a record for our meals.

Emilio Federico Gnecco: This is mostly explained by a significant improvement in agricultural productivity indicators, including a 20 percent year over year increase in yields to 80 tons per hectare, as well as to greater sugarcane availability. As I have mentioned before, the production mix stood at 52% sugar and 48% ethanol. This resulted in a sugar production of 806,000 tons in 2023, a new record for our mills, as well as a year-over-year increase of over 300,000 tons. As shown in the bottom right chart, while we maximize sugar production during the whole 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 second half as ethanol prices decreased. This proves the high degree of flexibility of almonds.

This is mostly explained by a significant improvement in agricultural productivity indicators, including a 20% year over year increase in yields to 80 tons per Hector as well as through greater sugarcane availability.

As commented before production mix stood at 52% sugar and 48% ethanol. This resulted in a sugar production.

806000 tons in 2023, making a new record for our mills as well as our year over year increase.

Over 300000 tonnes.

As shown in the bottom right chart, what we maximize sugar production during the whole year to profit from the rally in global sugar prices last year, we maximize ethanol during the first semester and streets to sugar during the second half as ethanol prices decrease this groups. The high degree of luck CBD deal volume.

Yes.

Emilio Federico Gnecco: Let's please turn to slide eight, where we describe our sales conducted throughout the year. Net sales amounted to $229 million in the quarter and $700 million on a year-over-year basis, making a 16% increase compared to the previous year in both cases. This was driven by higher sugar sales on higher production and prices, which fully offset the overall reduction in ethanol sales. As you can see on the top left chart.

Let's please turn to slide eight we describe our sales conducted throughout the year.

Net sales amounted to $229 million during the quarter and $700 million on a year over year basis, making a 16% increase compared to the previous year in both cases.

This was driven by higher sugar sales on higher production and prices, which fully offset the overall reduction in ethanol space.

As you can see on the top left chart.

Emilio Federico Gnecco: Selling volumes of sugar amounted to 796,000 tons in the full year, as our mixed decision favored sugar production to capture the significant price premium over FMI. Consequently, our average selling price increased 24% versus the prior year. In the case of ethanol, we made the commercial decision to reduce sales and build stocks as prices decreased, anticipating high supply levels. Thus, the year-over-year sales comparison is only indicative. Since we ran a completely opposite strategy during 2022, maximizing ethanol production, taking advantage of a very attractive price.

Selling volumes of sugar amounted to 796000 tonnes during the full year.

Our mixed decision favorite sugar production to capture the significant price premium over at home.

Consequently, our average selling price increased 24% versus the prior year.

In the case of ethanol, we made the commercial decision to reduce sales of meal stocks as prices increase anticipating high supply levels.

Year over year sales comparison is only indicative.

Since we run a completely opposite strategy during 2022, maximizing ethanol production taking advantage of.

A very attractive prices.

That being said during.

Emilio Federico Gnecco: During 2023, the export market opened a window of opportunity, and we sold 54,000 cubic meters at an average price of $637 per cubic meter. This is since we have the necessary certifications and industry capacity to meet the product's capacity on an accumulated basis. Energy selling volumes increased 18% compared to the prior year, but the average selling price decreased by 9% due to low energy spot prices. Regarding Cambron credits, we sold over 440,000 Ceballos during the year, amounting to $8 million in sales.

During 2023, the export market opened the window of opportunity and we sold 54000 cubic meters at an average price of $637 per cubic meter.

So since we have the necessary certifications and industry capacity to meet products that basically vacations.

On an accumulated basis.

Energy selling volumes increased 18% compared to the prior year, but the average selling price decreased by 9% due to low energy spot prices.

We've gotten Cameroon credits, we sold over 440000, and so by us during the year amounting to $8 million in sales.

Emilio Federico Gnecco: Despite representing an 8% year-over-year increase in the selling price, the declining volume sold is explained by lower volumes of cevallos issued on lower ethanols. On the following slide, we explain our cash costs. Total cash cost reflects on a cash basis how much it costs to produce one pound of sugar and ethanol in sugar equivalents. On a per unit basis, our gas costs amounted to $0.139 per pound of sugar equivalent, 6% higher than in the prior year.

Despite representing an 8% year over year increase in the selling price. The declining volume sold is explained by lower volumes of survivors issued on lower ethanol sales.

On the following slide we explain our cash cost.

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

On a per unit basis, our cash cost amounted to 13 cents per pound of sugar equivalent.

6% higher than in the prior year.

Emilio Federico Gnecco: This is mainly explained by, first, a 20 percent year over year increase in SG&A expenses on account of higher freight costs due to our commercial decision to produce more sugar and profit from higher relative prices. And second, maintenance capex was 5% higher than in 2022 due to the appreciation of the Brazilian Real, as well as a higher renewal area and planting costs versus the prior year. However, note that we were able to better dilute our production costs thanks to the year-over-year increase in milling volumes, diminishing the increase in total cash costs. All of our efforts are devoted to further enhance efficiencies to continue reducing it.

This is mainly explained by 1st% to 20% year over year increase in SG&A expenses on account of higher freight costs.

To a commercial decision to produce more sugar and profit from higher relative prices.

Second maintaining capex was 5% higher than in 2022 due to the appreciation of the Brazilian but as well as a higher renewal area and blending costs versus the prior year.

However, note that we were able to better dilute our production costs. Thanks to the year over year increase milling volumes diminishing the increase in total cash cost.

All of our efforts are devoted to further enhance efficiencies to continue reducing it as we continue ramping up operations in our cluster cash cost will resume its downward trend.

Emilio Federico Gnecco: As we continue ramping up operations in our cluster, cash costs will resume their downward trend. Please go to page 10, where we would like to present the financial performance of sugar, ethanol, and energy. Adjusted DDA amounted to $87 million during the fourth quarter, 14% lower than the same period last year. Despite increasing net sales and the gains reported in the mark-to-market of our commodity hedge position, lower adjusted EBITDA generation was driven by a year-over-year loss in the mark-to-market of our biological assets. On a full-year basis, Adjusted EVTA reached $396 million, presenting a 6% increase versus last year and a new record for this business unit, mostly explained by the increase in net. Finally, to conclude with the sugar, ethanol, and energy business, please turn to slide 11, where we would like to briefly talk about the current outlook. We have entered 2024 with good sugarcane availability, and we are currently one of the few players in Brazil crushing and producing sugar. Being able to crash year-round, even during the traditional in-the-half-a-spirit period, is one of our main competitive advantages.

Please go to page 10, where we would like to present, the financial performance of the sugar ethanol and energy business.

Adjusted EBITDA amounted to $87 million during the fourth quarter, 14% lower than the same period of last year. Despite.

Despite the increase in net sales and the gains reported in the mark to market of our commodity hedge position lower adjusted EBITDA generation was driven by a year over year loss in the mark to market of our biological assets.

On a full year basis, adjusted EBITDA reached $396 million, presenting a 6% increase versus last year and a new record for this business unit, mostly explained by the increasing net changes.

Finally to conclude with the sugar ethanol and energy business. Please turn to slide 11, where we would like to briefly talk about the current outlook.

We have entered 2024 with good sugarcane availability and we are currently one of the few players in Brazil, crushing and position sugar being.

Being able to crush year round, even doing their traditional into how the spirit is one of our main competitive advantages.

Emilio Federico Gnecco: Assuming the weather goes normal, we expect to increase our crushing volume versus 2023, as we have sufficient sugarcane availability to use our industrial capacity. This, in turn, will result in a reduction in unitary costs due to better dilution of fixed costs, as mentioned before. From a commercial point of view, sugar prices continue to be supported by strong fundamentals. We are in an excellent position to profit from this scenario, as we have 53% of our expected 2024 sugar production still ahead. In the case of ethanol, parity at the top currently stands at a low 60%.

Assuming weather going normal we expect to increase our crushing volume by this was 2023 as we have sufficient sugarcane availability to use our industrial capacity.

This in turn will result in a reduction in unitary costs due to better dilution of fixed costs as mentioned before.

From a commercial point of view sugar prices continued to be supported by strong fundamentals were in an excellent position to profit from this scenario as we have 53% of our expected 2020 for sugar production still unhedged.

In the case of ethanol parity at the pump currently stands at low 60 percents.

Emilio Federico Gnecco: Pressured by greater inventory levels in Brazil, even though demand has significantly switched to this type of fuel, we believe ethanol prices have room to increase since less ethanol is expected to be produced during the 2024-2025 harvest, explained by less gain being crushed in Brazil on account of drier weather and oil players still maximizing sugar production, even at its attractive premium. Now we would like to move on to the final bit. Please go to slide 13, for the new campaign that we are currently engaged in. We have completed planting activities in 279,000 hectares with a favorable weather app. This represents a 5% increase in planted area compared to the previous campaign. In this regard, we'd like to mention that weather in South America has shifted to El Nio after three consecutive years of dry weather. Rains registered throughout summertime allowed for an improvement in soil moisture and a recovery of water reservoirs in all of our productive beaches.

Pressured by greater inventory levels in Brazil, even though demand has significantly switch to this type of fuel.

We believe ethanol prices have room to increase seen less ethanol is expected to be produced during 2020 for 2025 hours explained by less gain being crushed in Brazil on account of drier weather and our players still maximizing sugar production given its attractive premium.

Now, we would like to move onto the pharma business.

Please go to slide 13.

For the new campaign that we are currently engaged in.

We have completed planting activities in 279000 hectares with a favorable weather outlook.

This represents a 5% increase in planted area compared to the previous campaign.

This regard wed like to mentioned that weather in South America has shifted to anemia. After three consecutive years of dry weather range Richard throughout summertime allowed for an improvement in soil moisture and a recovery of water reservoirs in all our productive regions.

Emilio Federico Gnecco: That's all for today. Most of our crops are undergoing the yield definition phase, so the evolution of weather during the upcoming weeks will be key. We expect a full recovery in our crop production in 2024, while for our rice segment, we are forecasting better yields due to the full recovery in water resources. On the following page 14, we present the financial performance of our farming business. Adjusted VTA for the farming business totaled $14 million in the quarter, making a 34% year-over-year increase, while on an annual basis it reached $103 million, 25% higher than the previous year.

To date <unk>.

Most of our crops are undergoing its still definition phase so the evolution of weather during the upcoming weeks will be key.

We expect a full recovery in a row crop production in 2024.

While for our Rice segment, we are forecasting better yields due to the full recovery in water reservoirs.

On the following page 14, we present, the financial performance of our farming business.

Adjusted EBITDA for the farming business totaled $14 million in the quarter, making up 34% year over year increase while on a nominal basis reached 103 million, 25% higher than the previous year.

Emilio Federico Gnecco: The full-year results increase was mainly explained by an outperformance from our rice division, coupled with the sale of El Medillano farm, which in turn fully offset the weak performance of our crops and dairy sector. Before going into the results of each operating segment, I would like to comment that, effective for our year-ended 2023, we have modified our internal reporting to refine the way we view our farming business and its interaction with the land transformation and cattle activities embedded within such operations. Previously, we reviewed the results of our land transformation strategy as a separate activity upon disposition of transformed farmland and other rural properties. As of the fourth quarter of 2023, we started allocating any profit from disposition of farmland or a bargain purchase gain as part of the farming activity to which such farming belongs. Adjusted EVDA for our crop segment amounted to a negative $304,000 during the fourth quarter, while on an annual basis it reached $27 million.

Full year results increase was mainly explained by an outperformance from our Rice division coupled with the sale of an <unk> firm, which in turn.

We offset the weak performance of our crops and they re segments.

Before going into the results of each operating segment I would like to comment that effective for our year ended 2003, we have modified our internal reporting.

To refine the way, we view, our funding business and its interaction with the land transformation and capital activities and burbot within such operations.

Obviously, we reviewed the results of our land transformation strategy as a separate activity. Upon this position of transform prominence on or other rule our property.

As from the fourth quarter of 2023, we started allocating any profit from disposition of farmland or a bargain purchase gain as part of the farming activity, whereas such farming belongs.

Adjusted EBITDA for our crop segment amounted to a negative of $304000 during the fourth quarter, while on an annual basis reached $27 million. The latest figure reflects the sale of our <unk> conducted in September 2020, we gen.

Emilio Federico Gnecco: The latest figure reflects the sale of a Mariano farm conducted in September 2023, which generated an adjusted EVDA of $30 million previously booked in the land transformation sector. Crop production on a standalone basis, that is, before the sale of the farm concluded in a breakeven adjusted LEDA for both the quarter and full year results, as expected. Results were mainly impacted by the reduction in yields, coupled with a genuine increase in cost in dollar terms. Adjusted EVPA in our right segment was $8 million during the fourth quarter and $48 million on an accumulated basis.

<unk> and adjusted EBITDA of $30 million previously booked in the land transformation.

Group's production on a standalone basis that is before the sale of the thumb concluded in a breakeven adjusted EBITDA for both the quarter and full year results as expected.

Results were mainly impacted by the reduction in yields coupled with a genuine increase in cost in dollar terms.

Adjusted EBITDA in our <unk> segment was $8 million during the fourth quarter and $48 million on an accumulated basis.

Emilio Federico Gnecco: The increase in both cases was driven by higher average selling prices 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 increase in costs in dollar terms. Moving on to the daily segment, Adjusted EBITDA totaled $6 million, 25% lower than the prior year, while on a full-year basis it stood at $28 million, making a 9% year-over-year reduction. Lower crop output increased corn silage price, which is our main cow feed driving the year-over-year decline in our dairy sector. However, co-productivity reached record levels, and we leveraged our industrial flexibility to continue producing the product with the highest marginal contribution. Let's now turn to page 16, where we would like to present our capital allocation strategy.

The increase in both cases, we're through and by higher average selling prices 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 cost in dollar terms.

Moving on to the daily segment, adjusted EBITDA totaled $6 million, 25% lower than the prior year, while on a full year basis, it stood at $28 million, making a 9% year over year reduction.

Lower crop output increased corn silage prices, which is our main our feet driving the year over year decline in our dairy segment, However, co Peru, Pvp reached record levels and we leveraged from our industrial flexibility to continue producing the product with the highest marginal.

Contribution.

Let's now turn to page 16, where we would like 2% our capital allocation strategy.

Emilio Federico Gnecco: 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 repurchase. Throughout 2023, we distributed $61 million, or 43% of the net cash from operations generated in 2022. This was executed via cash dividends in the amount of $35 million, coupled with a repurchase of $26 million in shares. In 2023, we generated $176 million of net cash from operations. Consequently, our minimum distribution amounts to $70 million during 2024. Pending the approval of the Annual General Meeting, cash dividends will amount to $35 million to be paid in two installments of $17.5 million each.

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 repurchase.

Throughout 2023, we distributed $61 million or 43% of the net cash from operations generated in 2022.

This was executed via cash dividends in the amount of $35 million, coupled with the repurchase of $26 million in shares.

In 2023, we generated $176 million of net cash from operations. Consequently, our minimum distribution amounts to $70 million during 2024.

Pending the approval of the annual general meeting cash dividends will amount.

$35 million to be paid in two installments of $17 $5 million each.

Emilio Federico Gnecco: Additionally, here today, we have already repurchased 18 million dollars in shares, which represents approximately 1.7 percent of the company's shares. Please turn to slide 17 for a broader view of our deposition. Net debt amounted to $503 million, making a 26% decrease compared to the same period of last year and a 29% reduction quarter over quarter.

Additionally year to date, we have already repurchased $18 million in shares which represents approximately one 7% of the company.

Please turn to slide 17 for a broader view or that decision.

Net debt amounted to $503 million, making at 26% decrease compared to the same period of last year, and then 29% reduction quarter over quarter.

Emilio Federico Gnecco: This was explained by a significant reduction in the gross debt position, mainly in our farming business, thanks to very good operational results and the company's financial strategy carried out throughout the year that enabled us to take advantage of opportunities in Argentina's financial market and benefit from the sharp depreciation of the Argentine peso. As shown in our financial figures, the reduction in our net debt position was done without disrupting our distribution policy and growth project. As of December 31st, 2023, our liquidity ratio reached 2.8 times, showing the company's full capacity to repay short-term debt with its cash balance. Whereas our net leverage ratio was 1.1 times, 0.5 times down compared to the previous year.

This was explained by a significant reduction in the gross debt position, mainly in our farming business.

Two very good operational results and the company's financial strategy carried out throughout the year that enabled us to take advantage of opportunities in Argentina financial market and benefit from the sharp depreciation of the Argentine peso.

As shown in our financial figures the reduction in our net debt position was done without is attending our distribution policy and growth projects.

As of December 31, 2023, our liquidity ratio reached two eight times showing of the company's full capacity to repay short term debt with its cash balances.

Our net leverage ratio was one one times 0.5 times down compared to the previous year.

Emilio Federico Gnecco: On the following slide, we explain our CAPEX project. 27% of total investments consisted of expansion projects. In Brazil, we continue increasing our sugar cane plantations and the expansion of our biomethane production to replace diesel consumption and explore other alternative uses. During 2023, we reviewed our CapEx investments in our farming business to generate savings during a year of adverse weather in Argentina. Our main CAPEX program consists of expanding our rice operations and finalizing the construction of our second biodigester in our dairy operation and the upgrade of our cheese factory line in Mortero's facility. To conclude, I would like to thank our team for the extraordinary results delivered.

On the following slide we explain our capex projects.

7% of total investments consisted of expansion projects in Brazil, we continue increasing our sugarcane plantation and the expansion of our Biomethane production to replace diesel consumption and explore other alternative uses.

During 2023, we reviewed our capex investments.

<unk> business to generate savings in a year of adverse weather in Argentina.

Our main Capex program consisted of expanding our <unk> operations and finalizing the construction of our second by Yoda gesture daily operation and the upgrade of our cheese factory line and more theaters facility.

To conclude I would like to thank our team for the extraordinary results delivered as you all know and Mariano also mentioned when we open the call 2023 started as a very challenging year, but we were able to turnaround the yachts and deliver strong results showing the company's resilience against adverse conditions.

Emilio Federico Gnecco: As you know, and Mariano also mentioned when we opened the call, 2023 started as a very challenging year, but we were able to turn things around and deliver strong results, showing the company's resilience against adverse conditions based on great productive assets, diversification of products and regions, and last but not least, our people. Thank you very much for your time.

Based on great productive assets diversification of products and regions and last but not least our people. Thank you very much for your time, well now open to questions.

Thank you the floor is now open for questions. If you have a question. Please write it down into Q&A section or click on raise hands for audio questions. Please.

Please remember that your company's name should be visible for your question to be taken.

Would you ask that when you pose your question that you pick up your headset to provide optimum sound quality.

Please hold while we poll for questions.

Our first question comes from Isabella <unk> with Bank of America, you can activate your microphone.

Operator: We're 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 or click on "raise your hand" for audio questions. Please remember that your company's name should be visible for your question to be taken. Would you please ensure that when you pose your question, you pick up your headset to provide optimum sound quality?

Thank you very much and good morning, everyone. Thanks for the call.

Two questions first of all on sugar and ethanol.

You mentioned in your press release, right that you expect crushing could be up.

Year over year. So I was wondering if you could give us a sense of.

What volume of cane crushed this year, we should be looking at and if you could elaborate a little bit a little bit more on the mix between sugar and ethanol and also.

Operator: Please hold while we poll for questions. Our first question comes from Isabella Simonato with Bank of America. You can activate your microphone.

Isabella Simonato: Thank you very much. Good morning, everyone. Thanks for the call. I have two questions. First of all, on sugar and ethanol. You mentioned in the press release, right, that you expect crushing to be up, year over year. So I was wondering if you could give us a sense of, weather permitting, right, and the next couple of weeks.

The export market of ethanol, which is you took advantage of in 2023, and how do you see the outlook for that.

And second on the crop business and that includes price.

And also about yield perspective for for the season.

Yes.

Weather permitting right there in the next couple of weeks, but.

Mariano Bosch: Also, when we think about the cost side, right, this could give us some sort of outflow for the north where the cost per hectare is looking like for the upcoming season. I think that would help us to understand the outlook for 2024. Thank you so much.

Also when we think about the cost side.

Side right.

If you could give us a.

Sort of outflow corridor, where.

Cost per Hector it looked like for the upcoming season, I think that would help us.

To understand that the outlook for 2020. Thank you so much.

Renato Junqueira: Okay, thank you Isabella for your question. To take the first part of the question, I will ask Renato to give more clarity on the sugar and ethanol segments, and then I will take the crops and rice comment. Hi Isabel, thank you for your question. Regarding the sugarcane question, as it was mentioned in the presentation, in the last quarter of last year, we had a very good range. That's one of the reasons that we crushed less cane compared to the year before. But we entered the first quarter in very good condition, which was very good considering our continuous harvest model. So today we have already crushed more sugarcane than we crushed in the first quarter of last year. So it's a very good situation. In February and March, the weather is a little bit drier than normal.

Okay. Thank you Tyler for your question.

To take the first part of that question I will ask Renato to lead more clarity on the sugar and ethanol segment, and then I will take the crop Sunrise <unk> comment.

Hi, Thank you for your question.

Regarding the sugarcane question.

It was mentioned in the presentation.

In the last quarter of last year, we have a very good ranks. That's one of the reasons that rush at the last game.

Compared to the year before but we entered the first quarter and a very good condition, which was very good considering our.

Continues harvest model.

Today, we have already crushed in the first border more sugar Kingdom regressed.

In the first quarter of last year.

Good situation.

In February and March the weather has been a little bit drier than normal.

Renato Junqueira: So if we take all this into consideration, we think that our yields are going to be similar to the ones that we had last year. But we are still optimistic that we're going to crush more cane than last year because our area of sugarcane has increased. So we expect to have the potential to crush approximately 5% more than we crushed last year. Regarding the second part of the question, the mix of production, we will keep maximizing the production of sugar because you're still paying much more than ethanol right now. Last year, we reached a mix of 52%.

So if you put all.

Consideration, we think that our yields are going to be similar to the ones that we had last.

Last year.

But we are still optimistic for going through gross margin gain than the last few years, because our area off sugarcane has increased so we expect a potential true.

True crush.

Approximately 5% more than we crush it lessee or.

So regarding the second part of your question is the mix of production.

Sure.

Maximizing the production of sugar brokerage is still paying much more than than ethanol right now.

Last year, we never reached a mix of 52%. So we've seen this year.

Renato Junqueira: So we think this year we are going to achieve a mix similar to that, maybe a little bit more due to small adjustments and focus on the sugar operation. And I think it's important to mention that we believe that the ethanol price is going to be, is going to increase, and the parity rate is going to reach 7% at some point in the year. And if that happens, the ethanol equivalent is around 20 cents per pound. So this is like a floor on how much we have to change the mix.

We're going to achieve a mix similar to that maybe a little bit more.

Due to his mall.

Adjustments and focus on the sugar.

Operation.

And I think it's important to drew mentioned that we believe that the ethanol price is going to be.

You are going to increase and the barge rates are going to reach 7% at some point of the year.

It happens.

The sugar ethanol equivalent.

Our loan to any sense for Paul. So this is this is like a florida through half two.

Change the mix.

Renato Junqueira: And regarding exports. We export a lot of ethanol to Europe. In 2022, there was a very good opportunity. Last year, we exported approximately 50,000 cubic meters. This year, we haven't exported any ethanol to Europe yet because we expect that the prices in Brazil are going to increase. So we don't have the export window open.

And regarding the exports.

We export a lot of ethanol to Europe.

In 2022.

There was a very good opportunity.

Last year, we have.

Exported approximately 50000 commuters does there we havent exported any ethanol Europe yet.

We would expect that the prices in the in the <unk>.

Brazil is going to increase.

So we don't have the export lingo open.

Renato Junqueira: Also, the price of oil when we exported ethanol back in 2022 was very high, which is not the case right now. But, of course, we have all the possibilities to export. We have the Bonsucro certification.

Also the price of oil.

When we export ethanol back in 2020 through was very high which is not the case right now.

But of course, we have all the possibility to export we have to go through group certification, we have all the equipments to produce.

Renato Junqueira: We have all the equipment to produce the ethanol required by the European market. So if that happens, we will be getting this opportunity. Thank you, Renato.

With all required by European markets. So if that happens we will do is getting these opportunities.

Thank you Renato.

Mariano Bosch: And Isabella, regarding the crops and rice that you were asking, and you're specifically asking about the rice, we are today in the middle of the harvest. So, we have already harvested 50% of the rice that is in good shape, and now we still need to harvest the other 50%. Thinking for next year, the cost of production. So, the cost of production next year, we think that it's going to be in line with the previous year because there are many different factors, and within the factors that are improving costs are all our efficiencies that we've been working with increasing the area and coming into Uruguay and all the acquisitions that we took care of last year. So there is an improvement because of the efficiencies.

You're adding them, perhaps on price that you were asking.

Neuro is specifically asking about that rise.

<unk>, we are today in the middle of that kind of it. So we are have already corrected 50% that is enabled shape and now we see a need to kind of at the other 50% thinking for next year the cost of production. So the cost of production of next year, we think.

That is totally in line with the previous year, because there are many different factors.

And within the factors that are.

The improving cost are all our efficiency that we've been working with the increase in the area.

And coming into <unk>. The acquisition that we are taking care of paid last year.

So that is an improvement because of the efficiencies.

Mariano Bosch: And then in dollar terms, that is how we think about it. There are most of the costs that are going to be more competitive this year than what they were last year. That is, biofertilizer or fertilizers in general. And then even talking about the cost of fuel or irrigation costs as a total. Thank you. Next question from Thiago Duarte with BTG Pactual. You can activate your microphone.

And then.

In dollar terms that is how we think about it.

There are most of the costs that are going to be more competitive this year than what they were.

Last year that is.

A biopsy at the lighter effect delights us in January.

And then even talking about the cost of it.

Fewer.

M <unk>.

Irrigation cost asset data.

Okay.

Okay.

Thank you.

Next question from Thiago Duarte with BTG Pactual.

Davitt your microphone.

Yes, Hello, everybody. Thank you for the <unk>.

Thiago Duarte: Yeah, hello, everybody. Thank you for the opportunity. Yeah, I have two questions, and I think they are focused on the sugar and ethanol energy business. The first one is:

Furnishing.

Yes, I have two questions.

And I think focused on the sugar ethanol and energy business.

Thiago Duarte: As a follow-up, I think you made a comment in your prepared remarks with regard to the cash cost in this business. We saw an increase in the cost per pound in Q4. I presume this was due to the lower amount of cane crushed and, obviously, the lower dilution.

The first one is kind.

Kind of a follow up I think you made a comment in your prepared remarks with regards to the cash cost in this business. We saw we saw an increase in the cost per pound in Q4.

I presume this was due to the to.

The lower amount of cane crushed and obviously the lower dilution.

Thiago Duarte: And if I understand correctly, you're still confident that you can see a downward trend in 2024 total relative to 2023. So just wanted to make sure these understandings are correct with regard to cost in Q4 and to unitary cost in 2024. That would be the first question.

And if I understood Youre still confident that you can you can see a downward.

Trend in 2024 total relative to 2023, so just wanted to make sure. These these understandings are correct.

With regards to cost in Q4 and to unitary cost in 2024 and it will be the first question.

And the second question when we when you look at the expansion Capex I think it was $52 million.

Thiago Duarte: And the second question, when you look at the expansion capex, I think it was $52 million in 2023 and mostly focused on the building of the biodigester as well as the expansion of the plant. So, just wanted to know how much of that we should see moving on into 2024. My understanding is that most of these two particular projects are done in 2023 and how much of an expansion topic we could see carry over for the business into 2024. That will be it.

In 2023, and mostly focused on the built of the bio bio digester as well as the expansion of the plant and so just wanted to know how much of that we should see moving on into 2024. My understanding is that most of these.

Two particular projects are done.

In 2023, and how much of an expansion of Capex, we could see.

Carry over for the business into 2024 that will be it. Thank you.

Renato Junqueira: Thank you. Okay, thank you, Thiago, for your question. Renato, do you want to answer and then I can add something? OK, OK, so. Hi Thiago.

Okay. Thank you Kjell Burke for your question.

Do you want to answer and then I can complement.

Okay. Okay. So.

Hi, Chard with zinc for aggression, so regarding to the cost we think that there are some components of the cost that is going to increase such as labor doesn't bryza Gordon true to inflation.

Renato Junqueira: Thank you for your question. So, regarding the cost, we think that there are some components of the cost that is going to increase, such as labor that increased according to inflation, freight that is still under pressure, but there are other factors also in the numerator part of the costs that are decreasing, such as inputs in general. So I would say that the numerator part of the cost is almost flat year over year, but the denominator part, I think it's going to make the difference in our case. As I mentioned before, we still believe that we're going to crush more sugarcane this year compared to last year. So this dilutes our cost more. So we expect a cost similar or slightly lower, And regarding the question about the CAPEX, I think the CAPEX that we are projecting to do is exactly what we mentioned, is the expansion of our planting to fulfill our capacity in Mato Grosso do Sul, and also the biodigester expansion, we plan to increase our production of biomethane in Mato Grosso do Sul from 6,000 to 30,000 cubic meters per day in the next four years.

Freight which is a steel.

Under pressure, but there are other factors also in the numerator part of the costs that are decreasing such as the boots in general.

So I would say that the numerator part of the cost is almost flat year over year, but the denominator barge.

It's great to meet the <unk>.

In our case.

As I mentioned before we still believe that we're going to crush.

Sure.

The sugarcane this year compared to last year. So this dilute our costs.

So we expect the costs are similar.

<unk> is slightly lower than we had.

Last year.

And regarding the.

The question about the Capex I think the Capex that we are projecting should do is exactly what we mentioned.

The exposure of our planting true true fulfill our capacity and multiple doses of <unk> and also the bio digester expansion.

We plan to increase our production volume returning in Mato Grosso through from 630.

<unk> thousand commuters per day in the next four years. So that's basically the traffic that you are planning to.

Mariano Bosch: So that's basically the CAPEX that we are planning to do. Very clear, Renato, and Thiago, just to add, I wanted to be more open about our capacities for this year, and this has a lot to do with the capital allocation and how we think about First of all, these results that we are seeing today and this increase in distribution because of the increase in net cash operations are the clear consequence of all the investments that we've been doing during these years. So, today we still see a lot of growth opportunities, and as Renato was explaining about sugar and ethanol, we have this clear opportunity to increase this, continue to increase the sugarcane plantation, which is very efficient in this specific area, and continue to increase the biodigesting of the vineyards that then is transformed into biofertilizers. So, the whole system still has a lot to grow and a lot to replace diesel, etc. So, that is on sugar and ethanol. There are many other things that are also very interesting.

Do it.

Very clear air Donato <unk>.

<unk> just to complement.

I wanted to do make more open on on our Capex is for this year and this has a lot to do with our capital allocation and.

How we think about it.

First of all this said, we said that we are seeing today and this increase in distribution because of the increase of net gas operations.

A clear consequence of all the investments that we've been doing in this.

During this year.

So today, we still see lots of growth opportunities in our supply and other was explaining on the sugar and ethanol have deferred opportunity on increasing that continue to increase their sugarcane plantation that is very efficient in this specific area continue to increase the buy youre digesting of daiwa.

David Yes that Danny transform into a buyer fertilizer sold the whole system.

Still has a lot to grow and a lot to replace the diesel et cetera. So that is on the sugar and ethanol that there are many other things that are also range I think on top of these we have these expansion projects in the rice business as you've seen in the rice business, we've been growing and the results are clearly paying.

Mariano Bosch: On top of this, we have these expansion projects in the rice business. As you've seen in the rice business, we've been growing, and the results are clearly paying off. The same thing we have for dairy.

The same thing we have bought or are there any there are some opportunities that we think are very attractive. So we can expect this to continue to happen what you've been seeing in the last year.

Mariano Bosch: There are some opportunities that we think are very attractive. So we can expect this to continue to happen, as you've been seeing in the last years. But this also means that we are fully convinced of our distribution policy. We put in place this distribution policy two and a half years ago, and we are following it very closely. We are fully committed to this, and we are doing it through both dividends and buybacks, as Emilio explained. And the dividends are something you will be seeing, the $35 million. And on top of that, you saw that we bought back $18 million in shares, that is 1.7% of the company, in only two months. So that is something that we expect, or you can see, to continue to happen. That is above the policy,

But this also means that we are fully convinced of our distribution policy, we put in place the fully DCD traditional blow policy Glen a half years ago and we are following that very closely we are fully committed to lease and we.

We are doing through both dividends and buybacks as Emilio explained.

That evs are something you will be seeing that $35 million and on top of that you saw that we.

Both back.

At one point.

$18 million ourselves.

That is one 7% of the company in early two months. So that is something that we expect our you can see to continue to happen that is about the policy on most of the aes were being <unk>.

Mariano Bosch: And most of the years, we've been going above and beyond the policy, or at least that's what the policy says. So that's a clear view or something that we are clearly thinking about. So that was to complement the concept of how we think about CAPEX and capital allocation. Now, that's great, Mariano. Thank you for the additional call. 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 a question to be taken. We do ask, however, that when you pose your question, you pick up your headset to provide optimum sound quality.

Going about their policy.

Policy says at least so that's a clear view of that clear.

It's something that we're clearly thinking on.

So that was to complement the concept of how we think about the capex on.

Capital allocation.

No that's great Mariano Thank you for the additional color.

If you have a question. Please write it down into the Q&A section click on raise hand for audio questions. Please remember that your company's name should be visible for a question to be taken we do ask that when you pose your questions that you pick up your headset to provide optimal sound quality. Please hold while we poll for questions.

Operator: Please hold while we pull for questions. Next question from Larissa Pérez with Ita BBA. You can activate your microphone.

Next question from latest iPad with Quito BBA, you can activate your microphone.

Larissa Prez: Hi guys. Good morning, Mariano, Emilio, Renato, Victoria, and all the Adecoagro team. Thank you for taking my question and congratulations on the results. Once again, indeed, very resilient. I was wondering if you could share with us your thoughts on La Nina impacts, because the probability of La Nina coming back by the second half of this year has been steadily increasing, and I wanted to hear from you how much it could impact both the Argentinian farming division and the Brazilian sugar and ethanol division. That would be my first question regarding the impacts on the second semester and the beginning of next year. And my second question would be about the process for SAF certification.

Hi, guys. Good morning, Manny I know when you Hinata, Victoria, albeit that cadre team. Thank you for taking my question and congratulation to results once again, indeed very resilient.

I was wondering if you can share about your thoughts on lending I impacts because the probability of winning or coming back by the second half of this year has been steadily increasing and I wanted to hear from you. How much do you think you could impact both the Argentinian farming division into Brazilian sugar and ethanol division that would be my first question regarding the <unk>.

<unk> on the second semester and the beginning of next year.

And my second question would be on the passes all SaaS certification.

Mariano Bosch: Congratulations on getting the Angelica mill certified for SAF production. I would like to understand if you're planning on certifying your other mills and what are the next steps here that you anticipate toward supplying ethanol for SAF production. Those would be my two questions.

Congratulations on getting the Angelica mill certified for staff reduction I would like to understand if youre planning on certifying your other mills and what are the next steps here that you envision towards supplying ethanol first half production those would be my two questions. Thank you once again.

Mariano Bosch: Thank you once again. Okay, Larissa, thank you for both questions. I'm going to take some time to go in detail because I think these are very relevant. First of all, on La Nina. Here we need to be clear; we are all hearing about the La Nina year coming ahead of us. This is totally different from what happened the previous year because now it would be a La Nia year after an El Nio year. The great issue that we had with La Nia the previous year was because of a third consecutive year of La Nia.

Okay Larissa.

Thank you for your for both questions I'm going to take some time to devote in detail because I think are very relevant.

First of all on linear here, we need to be clear. We are all hearing about linear year coming ahead of us.

This is totally different to what happened.

The previous year, because now would be a linear year after el Nino year.

Great.

That we had with linear the previous year was because of a third consecutive year of linear and this is a very different situation than what we have today, where we have most of that or is that all fall and then you have a linear effect that of course, we have FX that they will go in detail in our segment.

Mariano Bosch: And this is a very different situation than what we have today, where we have most of the reservoirs full, and then you have the La Nia effect. That, of course, will have effects that I will go in detail in a segment-by-segment case and how this can affect us. First of all, on the sugar and ethanol business. The area where we are with our sugarcane plantation in Mato Grosso do Sul is an area that is neutral to El Nio or La Nia.

Segment case on how this can how can this affect us first of all on the sugar and ethanol business. The area, where we are with our sugarcane plantation in Matamoros, social is hot and heavy other this new tool and Nino oral anemia. So it doesn't really affect our own production. So we definitely.

Mariano Bosch: So it doesn't really affect our own production. So it doesn't have a clear consequence on our own production. But what we can see in La Nia is that the center south, in general, is more dry.

It's a clear.

Contact lens to our own production, but what we can see in linear is that said that the southeast generally smaller right and so.

Mariano Bosch: The harvest will be shorter but also lower. So, as Renato explained before, we expect a lower sugar cane production in Central South as a general thing, and that means it is optimistic for prices of sugar and ethanol both. So, all in all, for our sugar and ethanol business, we believe it is a positive. But when we go to the crops, that is what has been more affected by and is more affected by a La Nia year. We are already working on that.

The economy will be short term, but also lower so as Renato explained before we expect that lower sugarcane, Pradaxa and center Seltzer us.

And that means studies.

Optimistic for our prices of sugar and ethanol both so all in all for our sugar and ethanol basis. We believe it is.

Positive impact.

Then when we go to that <unk> that is what has been more affected and is more affected by linear year.

We are already working on that so while we are negotiating the lease is for <unk>.

Mariano Bosch: So while we are negotiating the leases for the crops, we are taking that into account. And also, when we present our planting plan, the crop rotation, and how we manage the crop rotation, we are also taking into account this potential La Nia year. And so we can mitigate the impact. But in crops, we always talk about mitigating the impact because you will always have some type of impact if we have a La Nia year. Then we moved into the daily, which is totally neutral; we don't see any effect of La Nia or El Nio, so in general, we can say that for our production system and our specifics, it is neutral, a little bit positive because, in general, prices go up in La Nia because the rest of the production is affected by La Nia y El Nio.

Taking that into account and also when we present, our planting plan their crop rotation in how we manage that crop rotation. We are also taking into account these potential linear year and so we can meet the gateway, but but in crops. We already talk about mitigating the impact because you will always have some type of impact.

Alright.

Yes.

Then we moved into their daily that four they be totally neutral, we don't see any effect for landing our El Nino So.

We intend that we can say that for our production system on our specifics is neutral a little bit positive because in general prices go up in a in a land <unk> got the rest of their production is affected with <unk>.

Mariano Bosch: And then to the rice segment, that is the one that could be more positive if we take the lesson learned from the previous years, because in this case, rice is 100% irrigated. So being 100% irrigated, if we have enough water, it is the ideal situation because in the La Nia year you have more sunshine, more sun, more temperature, and that helps in the evolution of the rice business. The point here is that you need to be with the reservoirs full.

Then.

<unk> segment that is the one that it could be more of a positive if we.

Take the lessons learned from previous years, because in this case <unk>, 100% deviated so being 100% in created if we have enough water <unk> because in the linear year youll have more sunshine more more sand more temperature and that helped a lot of the evolution of that.

And at the point here is that you need to be with the rest of us fall and today, we are with all the rest of our fall and we are very well prepared for next year, if we <unk> yet in the case of that REIT segment. So all these investments we've been doing in life are clearly paying off and we have learned.

Mariano Bosch: And today, all the reservoirs are full, and we are very well prepared for next year if we have a La Nia year in the case of the rice segment. So all these investments we've been doing in rice are clearly paying off, and we have learned lessons in order to plan the amount of hectares that we have enough water for. So that's why we are very, if it is a La Nia year for the rice business, it has a very positive impact. So that's all in all the impact of what La Nia could be.

Lessons.

To plan.

To plan the amount of <unk> that.

That we have enough water. So thats why we are very <unk>.

<unk> for the Rice business is very positive.

Has a very positive impact.

So that's.

All in all the the impact of what.

Mariano Bosch: And then going to your second question about the sustainable aviation fuel certification or the Corsia certification that allows us to produce sustainable aviation fuels, I think that it is important to mention here what happened yesterday in the Brazilian Congress. The Brazilian Congress is approving, with an important majority, the law on fuels for the future. And this law of fuels for the future is taking into account many things, including sustainable aviation fuel. So we believe that all what we are producing in Brazil through our sugar cane production is totally aligned with this law that Congress is approving. First of all, biofuels are going to be more relevant. The mix is increasing.

<unk> could be.

And then going to your second question about <unk>.

So Dana <unk> certification or the core certification that allows us to produce.

Yes.

Sustainable aviation fuels.

It is important to mention here what happened yesterday in David Actelion Congress, David affiliate in Congress is approving with the unimportant maturity there.

A few of the lull of the fuels for the future and this loss fuels for the future is taking into account many things, including the sustainable aviation fuel. So we believe that all what we are producing in Brazil through our sugarcane production.

<unk> is totally aligned with this low that the Congress is absolutely best of all.

The bio fuels are going to be more relevant there mix is increasing so they are in favor of biofuel and that is very important.

Mariano Bosch: So they are in favor of biofuels, and that is very important. Then they are putting a sustainable aviation fuel target of one percent in 2027, and from there, it will increase to 10 percent. So that opens the possibility of a new market for all our ethanol. And we can certificate, and be specific in your answer, we can certificate all what we have as a Bonsucro certification. So having all our Bonsucro certification allows us to produce more than 50 percent of our total ethanol production with this certification as of today. And of course, all the other mixes will also be certified, and this is a process. That is very relevant.

Then they are voting.

Sustainable aviation fuel target of 1% in 2027 and from their increasing to 10%. So that opens the possibility of a new market for all of our ethanol and we can certificate them being at Pacific on Euro and said, we can certificate all what we have a stable and sucralfate.

Deprecation, so having all our about silver certification allows us to produce more than 50% of our total ethanol.

With.

The way the certification as of today and of course, all the other means we know it'll be certificated rbc's epitopes or so.

That is a very relevant then this low also talks about <unk> and the <unk> due to start mixing bio last week, they've got say consumption. So by Youll ask is what we are producing on in which we are investing in other words had planning before through what we have.

Mariano Bosch: Then, this law also talks about biogas and the obligation to start mixing biogas with gas consumption. So, biogas is what we are producing and in which we are investing, as Renato was explaining before, through what we are taking out of the vineyards. And so, that is part of the same concept. Then, fourth, it talks about carbon storage. And carbon storage means the CO2 being able to put it back into the soil, and the area where we are producing is one of the areas in Brazil where you can do that because of the geological things that the area that we have there. Then, finally, the whole law talks about CO2 emissions from the very, very origin of the biofuel until full consumption. So in this whole chain, if we think about CO2 emissions, since the very beginning, these biofuels coming from sugarcane are the most efficient in the world. That's why we think this law is very much aligned with all our long-term strategies in Brazil and with our sustainable production models in general, not only in Brazil.

Taking out of there and yes, and so that is part of the same concept than fourth.

It talks about carbon storage and carbon storage means the CDL to being able to put it into this back into the soil and the area, where we are producing each one of the areas of Brazil, where you can do that because of the larger.

Thanks.

Our area that we have there.

Then finally.

The whole lot talks about the.

Tier two issuance since they have 80 video it easy enough.

Biofuel until their full consumption. So in this hotel.

We think gave out.

C O two emissions since the very beginning these biofuel is coming from the sugarcane.

The most efficient in the world. That's why we think all this law is very much aligned with all our long term strategy in Brazil and in our sustainable production model in Canada, not only would I see.

Okay.

Larissa Prez: Okay, thank you so much for the detailed answers. Thank you. 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 all very much. Thank you for participating in the call, and we hope to see you at our upcoming events. Thank you. This concludes today's presentation. You may disconnect at this time, and have a nice day.

Okay. Thank you so much for the detailed answer thank you.

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 all very much. Thank you for participating in the call and we hope to see you in our upcoming events.

Okay.

Thank you. This concludes today's presentation you may disconnect at this time and have a nice day.

Okay.