Q4 2024 Adecoagro SA Earnings Call
Operator: Good morning, ladies and gentlemen, and thank you for waiting.
Good morning, ladies and gentlemen, and thank you for waiting at this time, we would like to welcome everyone to other collaborators fourth quarter 2024 results conference call.
Operator: At this time, we would like to welcome everyone to Adecoagro's 4th Quarter 2024 Results Conference Call.
Operator: 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. After the company's remarks are completed, there will be a question and answer section.
Speaker Change: Today with US we have Mr. Mariano Bosch CEO, Mr. Emilio and Yaacov CFO, Mr. Here, not too sure Kate up at Ada Sugar ethanol and energy VP and Mrs. Victoria, <unk> Investor Relations Officer.
Speaker Change: We would like to inform you that this event is being recorded and all participants will be in a listen only mode. During the companys presentation.
Speaker Change: After the company's remarks are completed there will be a question and answer section at that time further instructions will be given.
Operator: At that time, further instructions will be given.
Operator: Before proceeding, let me 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. 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.
Speaker Change: Before proceeding let me mention that forward looking statements are based on the beliefs and assumptions of other collaborative management and on information currently available to the company painful risks uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future invest.
Speaker Change: <unk> should understand that general economic conditions industry conditions and other operating factors could also affect the future results of our required <unk> and could cause results to differ materially from those expressed in such forward looking statements now ill turn the conference over to Mr. Mariano Bosch CEO Mr Boss.
Operator: Now I'll turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.
You may begin your conference.
Mariano Bosch: Good morning and thank you for joining Adecoagro's 2024 fourth quarter research conference. Consolidated Adjusted EBITDA during the quarter reached $103 million and amounted $444 million in 2021. Starting with our businesses in Argentina and Uruguay, both our rice and dairy operations presented record results. This was possible thanks to the investments made throughout the years to increase production and consolidate our asset base, while being efficient in every stage of the value chain. Moreover, our vertical integration enabled us to cater both the export and domestic market. with our large product portfolio. Profiting from higher selling prices, in spite of the challenging year for our crops operations, we continue to deliver results thanks to our continuous focus on being the low-cost producer.
Mariano Bosch: Good morning, Thank you for joining <unk> 'twenty 'twenty four fourth quarter results conference.
Mariano Bosch: Consolidated adjusted EBITDA during the quarter reached $103 million and amounted $444 million in 2024.
Mariano Bosch: Starting with our business in Argentina, and Uruguay, both our rice daily operations presented record results. This was possible. Thanks to the investments made throughout the years to increase production and consolidate our asset base, while being <unk>.
Mariano Bosch: <unk> in every stage of their value chain. Moreover, our vertical integration enabled us to cater both the export and domestic markets.
Mariano Bosch: Our large product portfolio.
Mariano Bosch: Profiting from higher selling prices despite of the challenging year for our crops operations. We continue to the dealer results. Thanks to our continuous focus on being the low cost producer.
Mariano Bosch: Now, we are undergoing harvesting activities for our 2024-25 campaign. In rice, we have already harvested over 50% of the planted area with yields above the previous And on the other hand, we foresee an improvement in crops productivity versus prior season despite the uneven weather dynamics seen on our farms during summer.
Mariano Bosch: Now we are undergoing harvesting activities for our 'twenty 'twenty four 'twenty five campaign embrace we have already harvested over 50% of the Atlanta area with yields above the previous year.
Mariano Bosch: The other hand, we foresee an improvement in crops productivity versus prior year season, despite the uneven weather dynamics seen on our farms during summer.
Mariano Bosch: Now, let's move into our sugar, ethanol and energy business. As anticipated, not only did we achieve a new crushing record, but also a sugar mix and consequently a new record in total sugar produced. Thanks to our commercial strategy. We sold our production at an attractive price. While we continue to carry over ethanol stocks, waiting for the perfect timing to clear out the tanks, which indeed has arrived. Although the weather has been bright, we are currently crushing and supplying the market with our products, thanks to our continuous harvest model and the investment carried out to increase the size of our sugar cane plantation.
Mariano Bosch: Now, let's move into our sugar ethanol and energy business as anticipated not only did we achieve a new crushing record.
Mariano Bosch: But also assure mix and consequently, and new record in total shula produce thanks to our commercial strategy.
Mariano Bosch: We sold our production at attractive prices.
Mariano Bosch: While we continue to carryover ethanol stocks waiting for their feedback timing to clear out their tanks, which indeed has that right.
Mariano Bosch: Although the weather has been bright we're currently brushing and supplying the market with our product thanks to our continuous harvest model and the investments carried out to increase the size of our sugarcane plantation.
Mariano Bosch: A brief comment on shareholder distribution. During 2024, we distributed $102 million between dividends and share buybacks, $32 million more than our distribution policy. This was done without compromising our debt commitments nor disattending our growth project.
Mariano Bosch: A brief comment on shareholder distribution during 2024, we distributed $102 million between dividends and share buybacks $32 million more than our distribution policy.
Mariano Bosch: This was done without compromising our commitments, nor VSAT ending our growth projects.
Mariano Bosch: such as the cane expansion and the production of biomethane in Brazil, or the development of our rice and dairy operations in Argentina and Europe. For this year, based on the $161 million in net cash from operations presented, we should be distributing at least $64 million via a combination of dividends and balance.
Mariano Bosch: Such as the gaming expansion and the production of Biomethane in Brazil, or the development of our rice and dairy operations in Argentina and Uruguay.
Mariano Bosch: Or this year.
Mariano Bosch: Based on the $161 million in net cash from operations presented we shouldnt be distributing at least $64 million via a combination of dividends and buybacks.
Mariano Bosch: Before passing the word to Emilio, a brief comment on ES. As we grow the company, we are also growing our presence in the communities where our operations are located. by looking for new talents to complement our businesses' needs and to strengthen our culture. Key actions implemented include our Women in Agribusiness program, in which we train them in how to operate agriculture and industrial machinery, aiming to consider them for hiring when employment opportunities arise. Furthermore, through our leadership program, we identify employees with potential in order to prepare them for leadership positions.
Before passing the word to Emilio a brief comment on ESG.
Mariano Bosch: As we grow the company. We are also growing our presence in the communities where our operations are located.
Speaker Change: By looking for new talent to complement our business needs and to strengthen our culture key actions implemented include our <unk> program in which we train them in how to operate agriculture, and industrial machinery aiming to consider them.
Speaker Change: We're hiring when employment opportunities arise. Furthermore.
Speaker Change: Through our leadership program, we then defy employees with potential in order to prepare them for leadership positions.
Mariano Bosch: To conclude, I would like to reiterate my gratitude to all our teams. Although we faced some challenges through the year. We were able to achieve these results thanks to their hard work and dedication. Thank you to our shareholders for your continued support.
Speaker Change: To conclude I would like to reiterate my gratitude to all our teams, although we face some challenges through the year.
Speaker Change: We were able to achieve these results thanks to their hard work and dedication.
Speaker Change: Thank you our shareholders for your continued support.
Mariano Bosch: Now, I will let Emilio walk you through the numbers of the quarter. Thank you, Mariano.
Speaker Change: Now I will let Emilio walk you through the numbers of the quarter.
Speaker Change: Thank you Mariano good morning, everyone, let's start on page four with a summary of our consolidated financial results.
Emilio Gnecco: Good morning, everyone. Let's start on page four with a summary of our consolidated financial Gross sales totaled $368 million during the fourth quarter, while on an annual basis, they reached almost $1.5 billion. Despite the quarterly drop in sales, annual revenues were 2% higher year on over year on greater volume sold. given the overall increase in production. which in turn fully offset the lower prices for some of the commodities that we produce.
Speaker Change: Gross sales totaled $368 million during the fourth quarter, while on an annual basis, they reached almost $1 $5 billion.
Speaker Change: Despite the quarterly drop in savings annual revenues were 2% higher year over year on greater volumes sold.
Speaker Change: Given the overall increase in production, which in turn fully offset the lower prices for some of the commodities that we produce.
Emilio Gnecco: Adjusted EBDA reached $103 million during the quarter, making an 8% year-over-year increase, whereas for the full year, it amounted to $444 million. During the year, we achieved record results in our rice and dairy segments and marked operational records in our sugar, ethanol, and energy. However, results were negatively impacted by a year-over-year loss in the mark-to-market of our biological assets in our sugar, ethanol, and energy business. coupled with an uneven year over year comparison in our crop segment due to farm sales conducted throughout both periods.
Speaker Change: Adjusted EBITDA reached $103 million during the quarter, making an 8% year over year increase whereas for the full year it amounted to $444 million.
Speaker Change: During the year, we achieved record results in our rice and dairy segments on Mark operational records in our sugar ethanol and energy business.
Speaker Change: However results were negatively impacted by a year over year loss in the mark to market of our biological assets in our sugar ethanol and energy business.
Speaker Change: Without an uneven year over year comparison in our crops segment due to farm states conducted throughout both periods.
Emilio Gnecco: Now please turn to slide 5. As you can see on the upper right chart, we generated $161 million on net cash from operations in 2021. Despite the challenges faced, cash generation across our businesses prevailed thanks to our focus on efficiencies and low-cost production, together with the investments made throughout the past year.
Speaker Change: Now please turn to slide five.
Speaker Change: As you can see on the upper right chart, we generated $161 million on net cash from operations in 2024.
Speaker Change: Despite the challenges faced cash generation across our businesses prevail, thanks to our focus on efficiencies and low cost production together with the investments made throughout the past years.
Emilio 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 2% versus 2023, making a new record. Higher crushing translates into higher volume and better dilution of figures.
Speaker Change: Regarding our production figures in the bottom right chart, we can see that crushing volumes in our sugar ethanol and energy business were up 2% versus 2023, making a new record higher crushing translates into higher volume and better dilution of fixed costs.
Emilio Gnecco: in our farming division. The increase in the production of grains was explained by a significant recovery in yields after having experienced better weather conditions throughout our latest harvest.
Speaker Change: In our farming division.
Speaker Change: The increase in the production of grains was explained by a significant recovery in yields up to have an experience better weather conditions throughout or latest harvest season.
Emilio Gnecco: Let's move to slide 7 with the operational performance of our sugar, ethanol and energy. Total crashing volume reached. 84% of the land uses 0.12 million tons during 2024. A record for our magnitudes.
Speaker Change: Let's move to slide seven with the operational performance of our sugar ethanol and energy business.
Speaker Change: Total crushing volume.
Speaker Change: <unk>.
Speaker Change: $12 8 million tons during 2024, a record for our mills, although on a quarterly basis, our crushing was down 12% compared to the same period of last year. This new achievement was possible.
Emilio Gnecco: Although on a quarterly basis, our crushing was down 12% compared to the same period of last year. This new achievement was possible thanks to greater sugarcane availability given our expansion planting activities and third party cane. This, in turn, enabled us to mitigate the reduction in yields driven by lower than average rainfalls received throughout the year. In terms of mix, we continue to maximize sugar production given its attractive premium over ethanol. This resulted in a sugar mix and volume production of 52.2 percent and 832,000 tons respectively. marking new records for our men. Within our ethanol production, we are maximizing the production of hydrous ethanol as demand for this type of ethanol has been significantly increasing and gaining market share, offering the better margin.
Speaker Change: Thanks to greater sugarcane availability, given our expansion planting activities and third party cane. This in turn enabled us to mitigate the reduction in yields driven by lower than average rainfalls received throughout the year.
Speaker Change: In terms of mix, we continue to maximize sugar production given its attractive premium over ethanol. This resulted in a sugar mix in volume production of 52, 2% and 832000 tons, respectively, marking new <unk>.
Speaker Change: Records for our mills.
Speaker Change: Within our ethanol production, we are maximizing the production of hydrous ethanol as demand for these type of ethanol has been significantly increasing and gaining market share offering the better margin.
Emilio Gnecco: If required, we can dehydrate our ethanol at any time.
Speaker Change: If required we can dehydrate, our ethanol at any time.
Emilio Gnecco: Let's please turn to slide A, where we describe sales conducted throughout the period. Net sales amounted to $178 million in the quarter, making a 22% year-over-year decline. Whereas on a full year basis, they reached $680 million in line with the previous year.
Let's please turn to slide eight where we described sales conducted throughout the periods.
Speaker Change: Net sales amounted to $178 million in the quarter, making at 22% year over year decrease, whereas on a full year basis, they reached $680 million in line with the previous year.
Emilio Gnecco: As you can see on the top left chart, the increase in our annual volume sold of sugar was fully offset by the planning price. as explained in prior releases. Global sugar prices have come down versus the record level seen during 2023.
Speaker Change: As you can see on the top left chart the increase in our annual volume sold of sugar.
Speaker Change: Was fully offset by the declining prices.
Speaker Change: As explained in prior releases global sugar prices have come down versus the record levels seen during 2023.
Emilio Gnecco: Nevertheless, when considering the gains related to our commodity derivative financial instruments within our other operating income line, our average selling price for the year stood at 22.6 cents per pound compared For more information visit www.fema.gov Regarding our ethanol sales, prices have been recovering month over month on strong domestic consumption due to the low parity of the pump versus gasoline, even though this in U.S. dollar terms continued to be below the previous year due to the depreciation of the Brazilian real. Consequently, we continue holding on to our ethanol inventories by year-end to profit from higher expected prices.
Speaker Change: Nevertheless, when considering the gains related to our commodity derivative financial instruments within our other operating income line, our average selling price for the year stood at 22 six.
Speaker Change: Pound compared to 23, two cents per pound in 2023.
Speaker Change: Regarding our ethanol sales prices have been recovering month over month on strong domestic consumption due to the low priority of the pump versus gasoline, even though this in U S. Dollar terms continue to be below the previous year due to the deep <unk>.
Speaker Change: <unk> of the Brazilian real.
Speaker Change: Consequently, we continue holding onto our ethanol inventories by yearend to profit from higher expected prices our stocks represents.
Emilio Gnecco: Our stocks represent. 31% of our 2024 ethanol.
Speaker Change: 31% of our 2020 for ethanol production.
Emilio Gnecco: Moving on to energy. Throughout the fourth quarter, we used our stored bagasse to produce energy to profit from the hike in price.
Speaker Change: Moving on to energy.
Speaker Change: Throughout the fourth quarter, we used our stored by gas to produce energy to profit from the height and spot prices explained by lower water reservoir levels. This in turn enable us to book sales at 480, Brazilian Reals per megawatt hour during the peak of.
Emilio Gnecco: explain by lower water reservoir levels. This, in turn, enables us to book sales. 480 Brazilian real per megawatt hour during the peak of the demand. On a nano basis, lower prices and a weaker Brazilian Rial fully offset the increasing energy expectancy.
Speaker Change: The demand.
Speaker Change: On an annual basis, lower prices and a weaker Brazilian real fully offset the increasing energy exported.
Speaker Change: Regarding carbon credits, we sold annually over 600000, <unk> at an average price of $14 versus value, making a total of $9 million in net savings.
Emilio Gnecco: Regarding carbon credits, we sold annually over 600,000 Ceballos at an average price of $14 per Ceballo, making a total of $9 million in net.
Emilio Gnecco: On the following slide, we explain our cash. Total cash cost reflects, on a cash basis, how much it costs us to produce one pound of sugar and ethanol in sugar-like For more information visit www.FEMA.gov On a per-unit basis, our cash costs amounted to 12.7 cents per pound of sugar equivalent. 8% lower than in the prior year. This is mainly explained by, first, a 53 percent year-over-year increase in tax recovery due to higher ethanol sales conducted. Second, a lower maintenance capex on lower renewal area. And third, the depreciation of the Brazilian Rial, which positively impacted our cost.
Speaker Change: On the following slide we explain our cash costs.
Speaker Change: Total cash cost reflects on a cash basis.
Speaker Change: Much it costs us to produce one pound of sugar and ethanol in sugar equivalent.
On a per unit basis, our cash costs amounted to $12 seven per pound of sugar equivalent and 8% lower than in the prior year.
Speaker Change: This is mainly explained by 1st% to 53% year over year increase in tax recovery due to higher ethanol sales conducted second.
Speaker Change: Sure maintaining its capex on lower renewal area.
Speaker Change: The depreciation of the Brazilian real which positively impacted our cost structure.
Emilio Gnecco: Gas cost was also benefited. by the year-over-year increase in TRS-equivalent produce, which, in turn, enable us to better dilute our.
Speaker Change: Cash cost was also benefited.
Speaker Change: By the year over year increase in Trs equivalent produce which in turn enable us to better dilute our costs. All our efforts are devoted to further enhance efficiencies to continue reducing.
Emilio Gnecco: All our efforts are devoted to further enhance efficiencies to continue reducing.
Emilio Gnecco: As we continue ramping up operations in our cluster, cash costs will continue its downward Please go to page 10, where we would like to present the financial performance of the sugar, ethanol and energy business. adjusted the PTA amounted to $105 million during the fourth quarter and $364 million on an annual basis. despite presenting a year-over-year gain in the mark-to-market of our commodity hedge position.
Speaker Change: As we continue ramping up operations in our cluster cash costs will continue its downward trend.
Speaker Change: Please go to page 10, where we were.
Speaker Change: We'd like to present, the financial performance of the sugar ethanol and energy business.
Speaker Change: Adjusted EBITDA amounted to $105 million during the fourth quarter and $364 million on a nominal basis despite percent in a year over year again in the mark to market of our commodity hedge position.
Emilio Gnecco: Our annual results were mainly offset by year-over-year losses in the mark-to-market of our biological assets on lower consecutive prices on harvest.
Speaker Change: Our annual results were mainly offset by year over year losses in the mark to market of our biological assets on lower constant cannot prices on harvested Kate.
Emilio Gnecco: 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 outcomes. Despite the dry weather experienced throughout 2024, we are currently one of the few players in Brazil crushing and producing sugar in Being able to crush cane year-round, even during the traditional inter-harvest period, is one of our main competitive. We expect a slower crushing pace during the first semester of the year as we undergo harvesting activities in cane with a limited growth potential. while we allow areas with greater potential to continue growing.
Speaker Change: Finally to conclude with the sugar ethanol and energy business. Please turn to slide 11, we would like to briefly talk about the current outlook.
Speaker Change: Despite.
Speaker Change: The dry weather experienced throughout 2024, we're currently one of the few players in Brazil, crushing and producing sugar and ethanol.
Speaker Change: Being able to grasp gain year round, even during the traditional inter harvest spirit is one of our main competitive advantages.
Speaker Change: We expect a slower aggressive pace during the first semester of the year as we undergo harvesting activities in gain with a limited growth potential.
Speaker Change: While we allow areas with greater potential to continue growing to be harvested during the second half with much better protein.
Emilio Gnecco: to be harvested during the second half with much better. Therefore, we focus a slight increase in our annual crushing figure versus 2024, assuming weather evolving norm.
Speaker Change: Therefore, we forecast a slight increase in our annual question figure versus 2024, assuming weather evolving normally.
Emilio Gnecco: From a commercial point of view, the world's supply of sugar continues to depend on Brazil's production. Sustained productivity is still recovering from last year's adverse weather conditions. Consequently, we still see some upside to current spot prices, reason why we only have had. 31% of our 2025 sugar product. In the case of ethanol, demand continues strong given the low parity of the pump versus gasoline. resulting in a recovery in prices given the limited new supply and low stock-to-use ratio. Our commercial strategy to carry over inventories is paying off. We are clearing out our tanks under a much more profitable price.
Speaker Change: From a commercial point of view the world supply of Sugar continues through the pen on Brazil's production boost.
Speaker Change: <unk> gained productivity is still recovering from last year's adverse weather conditions.
Speaker Change: Sequentially, we still see some upside to current spot prices recent why we only have hedged.
Speaker Change: 31% of our 'twenty to 'twenty five sugar production.
Speaker Change: In the case of ethanol demand continued strong given the low priority of the pump versus gasoline, resulting in a recovering prices given the limited new supply and low stock to use ratio.
Our commercial strategy to carryover inventories is paying off as we are clearly being out our tanks under a much more profitable price scenario.
Emilio Gnecco: Now, we would like to move on to the farming.
Speaker Change: Now, we would like to move on to the farming business.
Emilio Gnecco: Please go to slide 13. for the new campaign that we are currently engaged. We have completed planting activities over 300,000 hectares. under good soil moisture conditions, representing a 9% increase in planted area compared to the previous campaign. Despite the combination of high temperatures and lower than average rainfalls experienced by the beginning of 2025, The precipitation received by the end of January and throughout February enable our crop production to continue with its normal course of development. As of today, most of our crops are undergoing its yield definition phase, so the evolution of the weather during the upcoming weeks will be We expect yields for most of our crops to be in line with historical levels.
Speaker Change: Please go to slide 13.
Speaker Change: For the new campaign that we are currently engaged in we.
Speaker Change: We have completed planting activities over 300000 hectares under good soil moisture conditions, representing a 9% increase in planted area compared to the previous campaign.
Speaker Change: Despite the combination of high temperatures and lower than average rainfall it's experienced by the beginning of 2025 Crisil.
Precipitations received by the end of January and throughout February enabled our crop production to continue with its normal course of development as.
As of today most of our crops are undergoing need steel definition phase so the evolution of the weather during the upcoming weeks will be key.
Speaker Change: We expect yields for most of our crops to be in line with historical levels.
Emilio Gnecco: One for our right, second...
Speaker Change: One for our Rice segment.
Emilio Gnecco: We are forecasting a significant recovery in yield due to drought weather conditions and water availability during its yield definition. Daily, we continue enhancing efficiencies in our. which are already at full capacity.
Speaker Change: We are forecasting a significant recovery in yields due to weather conditions and water availability during its yield definition stage.
Speaker Change: In theory, we continue enhancing efficiencies in our free stalls.
Speaker Change: We are already at full capacity.
Emilio Gnecco: At the industry level, we are working on product development for the domestic and export markets while expanding our presence across the different price tiers with our consumer products.
Speaker Change: At the industry level, we are working on product development for the domestic and export markets, while expanding our presence across the different price tiers with our consumer product brands.
Speaker Change: On the following page 14.
Emilio Gnecco: on the following page 14. We present the financial performance of our farming business. adjusted the VTA for the farming business total $4 million during the quarter, whereas on an annual basis, it amounted to $103 million in line with the previous Starting with our crop segment, Adjusted EBDA amounted to negative $3 million in the fourth quarter, while on an annual basis it reached $19 million.
Speaker Change: We present, the financial performance of our farming business.
Speaker Change: Adjusted EBITDA for the farming business totaled $4 million during the quarter, whereas on an annual basis amounted to $103 million in line with the previous year.
Speaker Change: Starting with our crops segment, adjusted EBITDA amounted to negative $3 million in the fourth quarter, while on an annual basis, each reached $19 million.
Emilio Gnecco: excluding the farm sales conducted in both 2024 and 2023. Adjusted VTA for crops amounted to $4 million in 2024 compared to the negative $3 million in 2023. Although the segment performed better than the previous year, as we saw a significant year-over-year recovery in production, results were negatively impacted by lower international prices for our main products, as well as by higher costs in U.S. dollar terms and lower-than-expected corn yields due to the impact of CDOPLAQ.
Speaker Change: Excluding the farm sales conducted in both 2024 and 2023 <unk>.
Speaker Change: Adjusted EBITDA for crops amounted to $4 million in 2024 compared to the negative $3 million in 2023.
Speaker Change: Although the segment performed better than the previous year as we saw significant year over year recovery and production results were negatively impacted by lower international prices for our main products as well as by higher costs in U S dollar terms and lower than expected corn yields.
Speaker Change: Due to the impact of Cedar plasma.
Emilio Gnecco: Moving on to RISE, Adjusted EVTA reached $50 million for the full year, making a new record for this The results were driven by year-over-year gains reported in the mark-to-market of our biological assets on higher prices and higher-priced ale. focusing on the quarterly figures, adjusted VTA stood at negative $1 million due to the higher costs in U.S. dollar terms and declining the price of our carryover stocks, which negatively impacted results.
Speaker Change: Moving on to rise adjusted EBITDA reached $50 million for the full year, making a new record for this segment.
Speaker Change: Results were driven by year over year gains reported in the mark to market of our biological assets on higher prices and higher printing area.
Speaker Change: Focusing on the quarterly figures adjusted EBITDA suite at negative $1 million due to the higher costs in U S dollar terms.
Speaker Change: And decline in the price of our carryover stocks, which negatively impacted results.
Emilio Gnecco: Lastly, Adjusted EVTA in our dairy segment totaled $8 million during the period, whereas on an annual basis, it's reached record results with $34 million in Adjusted EVTA . . These results were positively impacted by higher sales on higher prices. to improve the mix of higher value added products and maximize the production of fluid milk for the domestic.
Speaker Change: Lastly, adjusted EBITDA in our dairy segment totaled $8 million during the period, whereas on an annual basis, it's reached record results with $34 million in adjusted EBITDA generation.
Speaker Change: Were positively impacted by higher sales on higher prices as we improve the mix of higher value added products and maximize the production of fluid milk for the domestic market.
Emilio Gnecco: Let's now turn to page 16.
Speaker Change: Let's now turn to page 16.
Emilio Gnecco: what we would like to present our capital allocation strategy. Throughout 2024, we distributed one hundred and two million dollars. $32 million more than the minimum stated in our distribution policy, marking a 9.4% distribution gain. This was executed via cash dividends in the amount of $35 million, coupled with the repurchase of $67 million in shares equal to 6.2% of the company's equity. In 2024, we generated $161 million of net cash from operations. Consequently, our minimum distribution amounts to $64 million during 2025. Here today, we have already repurchased $10 million in shares, which represents approximately 1.1% of the company's net worth.
Speaker Change: We would like 2% our capital allocation strategy.
Speaker Change: Throughout 2024, we distributed $102 million.
Speaker Change: $32 million more than the minimum stated in our distribution policy, marking a nine 4% distribution yield.
Speaker Change: This was executed via cash dividends in the amount of $35 million, coupled with the repurchase of $67 million in shares equal to six 2% of the company's equity.
Speaker Change: In 2024, we generated $161 million of net cash from operations. Consequently, our minimum distribution amounts to $64 million during 2025.
Speaker Change: Year to date, we have already referred to $10 million in shares which represents approximately one 1% of the company's equity.
Emilio Gnecco: Please turn to page 17 for a broader view of our debt position. Net debt amounted to $522 million in line with the previous year. Throughout the year, we have diligently reduced our gross debt. cash in the most efficient manner while looking for opportunities to finance our operations at the lowest cost. Consequently, our liquidity ratio reached 4.5 times versus 2.8 times in the prior year. showing the company's full capacity to repay short-term debt with its cash balances. while our net leverage ratio stood at 1.2%.
Speaker Change: Please turn to page 17 for a broader view of our debt position.
Speaker Change: Net debt amounted to $522 million in line with the previous year.
Speaker Change: Throughout the year.
Speaker Change: Have diligently reduce our gross debt and cash in the most efficient manner, while looking for opportunities to finance our operations at the lowest cost.
Speaker Change: Consequently, our liquidity ratio reached four five times versus two eight times in the prior year.
Speaker Change: Showing the company's full capacity to repay short term debt with its cash balances.
Speaker Change: While our net leverage ratio stood at one two times as shown in our financial figures. This was achieved without this attending our distribution policy and growth projects on the following slide we describe our Capex program.
Emilio Gnecco: shown in our financial figures, this was achieved without dissenting our distribution policy and growth.
Emilio Gnecco: on the following slide, we describe our CAPEX program. In 2024, we invested $104 million in expansion projects.
Speaker Change: In 2024, we invested $104 million in expansion projects.
Emilio Gnecco: from Brazil. expansion CAPEX was mostly allocated to increase our sugarcane plantation size. During the year, we were able to secure more area at attractive lease rates as our cluster is based in a region where there is plenty of land availability and low competition . .
Speaker Change: In Brazil <unk>.
Speaker Change: Spansion Capex was mostly allocated to increase our sugarcane plantation size.
During the year.
Speaker Change: We were able to secure more area at attractive lease rates as our cluster is based in a region, where there is plenty of land availability and low competition for land.
Emilio Gnecco: In our farming business, our main CAPEX program consisted of the development of a croppable area for rice production.
Speaker Change: Farming business. Our main Capex program consisted of the development of probable area for rice production.
Emilio Gnecco: third and last installment of rice milk acquisition in Argentina and Uruguay, the expansion of our drying and storage capacity in our Paso Dragón rice The construction of a new warehouse for our dairy products at our Chilico Dairy Processing Facility, among other Before we conclude our earnings presentation and open the call to questions, I would like to address recent developments concerning Tata's proposal to acquire a majority stake in Adecoagro. which we announced in recent press releases. On February 14th, 2025, our board received an unsolicited non-binding proposal from Teta Investments to acquire outstanding common shares of $12.41 per share, aiming to increase their holdings to 51% .
Speaker Change: The third and last installment of Rice Mills acquisition in Argentina, and Uruguay, the expansion of our driving and storage capacity.
Speaker Change: Muscle that are on rice mill.
Speaker Change: The construction of a new warehouse for our dairy products at our typical daily processing facility among other projects.
Speaker Change: Before we conclude our earnings presentation and open the call to questions I would like to address recent developments concerning taught us proposal to acquire a majority stake in <unk>.
Speaker Change: Which we announced in recent press releases.
Speaker Change: On February 14, 2025, our board received an unsolicited non binding proposal from Tessa investments to acquire outstanding common shares.
Speaker Change: <unk> 41 per share aiming to increase their holdings to 51%.
Emilio Gnecco: that currently holds approximately 20.2% of our shares as per their last public filing on February the 25th. Our board convened on February 16th to discuss this proposal. We engage legal and financial advisors to evaluate the proposal's terms and whether they align with the best interests of our shareholders and the community. Subsequently, we entered into discussions with TETA and signed an exclusivity letter to facilitate further negotiations.
Speaker Change: Currently holds approximately 20.
Speaker Change: 2% of our shares as per the last public filing on February the 25th.
Speaker Change: Our board convened on February 16 to discuss this proposal.
Speaker Change: We engaged legal and financial advisors to evaluate the proposals terms and whether they align with the best interests of our shareholders and the company.
Subsequently, we entered into discussions with Delta and Simon exclusivity letter to facilitate further negotiations.
Emilio Gnecco: While these discussions are ongoing, there's no assurance that we will reach to a definite agreement or complete a.
Speaker Change: While this discussions are ongoing there is no assurance that we will reach to a definitive agreement or complete a transaction.
Emilio Gnecco: Having said this, please note that due to legal restrictions, we will not be able to comment further or answer questions on the TETA proposal. Thank you very much for your time.
Speaker Change: This please note that due to legal restrictions, we will not be able to comment further or answer questions on the proposal.
Speaker Change: Thank you very much for your time, we will now open the call to questions.
Operator: We will now open the call to questions. Thank you.
Speaker Change: 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.
Operator: 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 poll for questions.
Speaker Change: 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.
Speaker Change: Please hold while we poll for questions.
Gustavo Troiano: Our first question comes from Gustavo Troiano with Itaú BBH. Good morning, everyone. Thanks for taking my question, actually. There are two points that I'd like to explore with you guys. The first one, in the earnings release and earlier in the call, you mentioned potential upside for spot prices on sugar.
Speaker Change: Our first question comes from Gustavo <unk> with <unk>.
Speaker Change: Good morning, everyone. Thanks for taking my question actually there are two points that I'd like to explore with you guys.
Speaker Change: First one in the earnings release and in the earlier in the call you had mentioned potential upside for spot prices on sugar.
Gustavo Troiano: So it would be nice to hear from you, what you think are the main triggers for a positive price action on sugar specifically, and what are the milestones or timing for us to see this positive price action going forward, this would be my first question. And the second one in regards to farming and crops. Recently, we had lots of discussions on the import tariffs between US and some other players. So just wanted to hear from you, basically your updated thoughts on the potential spillover impacts for your businesses specifically, and how you were seeing these potential changes in global trade affecting Adecoagro's operations at the end of the day.
Speaker Change: So it would be nice to hear from you.
What you think are the main triggers for a positive price action on sugar, specifically and what are the milestones or timing for us to see these positive price action going forward.
Speaker Change: My first question and.
Speaker Change: And the second one in regards to farming and crops.
Speaker Change: Recently, we had lots of discussions on the import tariffs between the U S and some other players. So just wanted to hear from you basically your updated thoughts on potential spillover impact for your businesses specifically on how you were seeing this.
Speaker Change: Potential changes in global trade affecting add that quadrant as operations at the end of the day. Thank you very much.
Gustavo Troiano: Thank you very much.
Operator: Hi Gustavo, thank you for your question.
Speaker Change: I will tell all thank you for your question.
Renato Junqueira: Renato will answer on the on our sugar prices view and then I will take the other part of the question.
Speaker Change: Right now, though will answer on the on our Shaw.
Speaker Change: Pricey save you.
Speaker Change: And then I would take the other part of your question Bernardo.
Renato Junqueira: Renato? Hi Gustavo, thank you for your question. We are positive with the S&D scenario of sugar. There were some disappoint crops in the north hemisphere, especially India, Thailand and Pakistan. So there is an increasing dependence of the Brazilian production in the short term and it seems that the Brazilian center-south crop, the next crop that starts in April, is going to be smaller than last year. This is a consequence of a difficult first semester that probably is going to have the consequence of the drought and the fires in the sugarcane areas of last year. The weather in the center-south region in February, starting in February, is very dry and the temperature is very high now, which is affecting sugarcane yields.
Speaker Change: I will start with J&J for Aircastle.
Speaker Change: Our positive we've adapted <unk> scenario.
Speaker Change: <unk> there were some disappoints crops, and the misfire, especially Asia, Thailand and Blackstone So.
Speaker Change: Increasing dependence of the Brazil production in the short term.
Speaker Change: And it seems that the Brazilian center solved crop.
The next next graph that the starts in April is going to be smaller than last year. This is a consequence of a difficult first semester that probably is going to have.
Speaker Change: Another consequence of the droughts and the fires in the sugarcane areas of last year.
Speaker Change: The weather in the center sulfur region.
Speaker Change: In February.
Speaker Change: Starting in February is very dry and the temperature is very high now which is affecting sugarcane.
Speaker Change: Yields.
Renato Junqueira: And also the sugarcane area is a bit lower than last year due to a higher replanted area that occurred last year. So considering this scenario, Brazil will have to keep maximizing sugar and sugar will have to be traded at an attractive premium over ethanol. So our strategy, since we have the tax rebate in Mato Grosso do Sul, so we have 18 cents per pound get close to the ethanol parity. So our strategy is to gradually increase our hedge if the price moves higher than 19 cents per pound. Today we have 31% of our production hedged at 20.7 cents per pound.
Speaker Change: And also the sugarcane area.
Speaker Change: Is a bit lower than last year due to a higher re blend in the area that awkward lesser year.
Speaker Change: So considering this scenario.
Speaker Change: We will have to keep in maximizing sugar.
Speaker Change: In sugar, we will have to be treated at an attractive premium over ethanol so our thrive.
Drive fish.
Speaker Change: Since we have the attacks.
Based in Mato Grosso soup, so we have a.
Adrian Sainsbury: Adrian Sainsbury bonds.
Adrian Sainsbury: Get close to the ethanol barracks, so I always thought that it has gradually increased our heads if you price moves higher than 19 cents per pound today, we have the.
Adrian Sainsbury: 31% of our production hedged.
Adrian Sainsbury: 27 Sainsbury bonds.
Renato Junqueira: Thank you, Renato.
Thank you for an adult.
Emilio Gnecco: Regarding your questions about the farming or crops prices, we think that for soy and corn basically, that is only a portion of our sales when we talk about the farming and a relatively small portion, we do see a benefit for the South American soy and corn production because of the ties or because of this commercial war that is going on. So that's a benefit for the South American production and you can see that on the basis that have already improved and we believe that that will continue to happen and will be even more stronger. But rice and dairy production, we compete in some places with some U.S.
Adrian Sainsbury: Regarding.
Adrian Sainsbury: Question on <unk>.
Adrian Sainsbury: They're farming or a crop prices.
<unk>.
Adrian Sainsbury: We think that for soya and corn are basically that is only a portion of our phase one way they'll go all their farming on a relatively small portion.
Adrian Sainsbury: We do see a benefit for the South American soybean and corn production.
Adrian Sainsbury: Most of the ties.
Adrian Sainsbury: Or because of the <unk>.
<unk> War that is going on so that's a benefit for the South American production and you can see that on the basis that how.
Adrian Sainsbury: We already improved.
Adrian Sainsbury: We believe that that will continue to happen and will be even more stronger, but Furthermore for us is very relevant what's going on on rice.
Adrian Sainsbury: <unk> also right hand daily production, we compete in some places with some USA rice hadn't because of some specific type of rise that we are producing and so we also see a benefit there with east where we are entering into some new markets in Central America et cetera. So we are taking some.
Emilio Gnecco: rice and because of some specific type of rice that we are producing and so we also see a benefit there with this where we are entering to some new market in Central America, etc. So we are taking some benefits of today's prices in these products also.
Adrian Sainsbury: Benefits of today.
Adrian Sainsbury: Prices in the sample I'd say also.
Emilio Gnecco: That's super clear, guys.
Adrian Sainsbury: That's clear guys. Thank you very much.
Emilio Gnecco: Thank you very much.
Operator: Thank you all.
Adrian Sainsbury: Withheld.
Matheus Enfeldt: Our next question comes from Matheus Enfeldt with UBS.
Speaker Change: Our next question comes from materials and filled with UBS.
Matheus Enfeldt: Hi, morning, Mariano, Emilio, Renato, Victoria, thank you for your time. Look, my first question, I understand that you can comment a lot, but I do have to ask, given the midterm implications and uncertainty that the offer brings for the company.
Hi, Good morning, Mariano Hinata, Victoria. Thank you for your time.
Speaker Change: First question I understand that you can't comment a lot, but I do have to ask given the midterm implications and uncertainty.
Speaker Change: That's another offer brings for the company.
Matheus Enfeldt: I want to ask on the offer itself, but if you could provide a bit more visibility on when you expect to have a bit more clarity or to be able to communicate a bit more visibility to the market, particularly in terms of timing, when do you expect the next steps to advance and how these discussions have changed management's near-term priority on time allocation and how that has become a focus for management for the company at this time.
Speaker Change: I wanted to ask on the offer itself, but if you could provide a bit more visibility on when you expect to have a bit more clarity or to be able to communicate.
Speaker Change: A bit more visibility to the market.
Speaker Change: Particularly in terms of timing when do you expect the next steps.
Speaker Change: To advance.
And how the discussions have changed.
Speaker Change: Management's near term priority on prime location, and how that has become a focus for four for management for the company.
Speaker Change: At this time and then my second question on sugarcane crushing I mean, you mentioned that theres, a slight potential for increasing sugarcane volumes for 2025.
Matheus Enfeldt: And then my second question on sugarcane crushing, I mean, you mentioned that there's a slight potential for increasing sugarcane volumes for 2025. My question is more on the constraints around raising crushing more, if this is just weather related, or on the other hand, if we had great weather, if you would have been able to reach the 14 million tons already. And also thinking about third-party gain, if there's a potential to maintain a higher third-party gain level to improve crushing, perhaps a bit more optimistic than the message for slightly raising for 2025. Those are my two questions.
Speaker Change: My question is more on the constrains around raising crushing more.
Speaker Change: This is just weather related.
Speaker Change: Or if or on the other hand, if we had great weather.
Speaker Change: You would have been able to reach the 40 million tons already.
Speaker Change: And also thinking about third party cane.
Speaker Change: If there is a potential to maintain a higher third party keen level to improve crushing perhaps a bit more optimistic than the message for a slightly raising for <unk>. Five those are my two questions. Thank you.
Operator: Thanks.
Emilio Gnecco: Okay, thank you, Matheus.
Okay. Thank you <unk>.
Renato Junqueira: I'm going to start for your second part of the question.
Speaker Change: <unk> started for this for your second part of your question I'm going to ask Renato to answer that question and I will complement defer necessary Bernardo.
Renato Junqueira: I'm going to ask Renato to answer that question and I will complement if necessary. Renato?
Renato Junqueira: Hi, Matheus. Last year's weather was very dry. Actually, it was 32% lower than historical average. So, to crush the record of 12.8 million tons, we have to advance in the sugarcane that would be crushed in the first quarter of this year. Consequently, we will have a very slow, less intensive quarter in terms of crushing the first quarter of this year. Now, we are selecting the sugarcane with lower potential to grow, to be harvested now, to leave the sugarcane that has more potential to grow, to be crushed later on this year. We think that in the second semester, the situation will improve as you will be crushing a lot of 18-month sugarcane that was planted last year.
Speaker Change: Hi materials.
Speaker Change: Last week last year, whether it was very dry actually was 32%.
Speaker Change: A lower than historical.
Speaker Change: Our arrangement is was 32% lower than historical average.
Krish: So to Krish <unk> of 12.
Speaker Change: <unk> 8 million tons that we have.
Speaker Change: Diverse.
Speaker Change: The initial gain that would be crushed in the first quarter of this year. Consequently, we will have a very slow.
Speaker Change: <unk>.
Speaker Change: The quarter in terms of crushing the first part of this year.
Speaker Change: Now we are selecting the sugarcane with lower potential for growth.
Speaker Change: She'll be harvests now to leave the sugar it can be up to has more potential to grow to be crush. It later on.
Speaker Change: This year.
Speaker Change: We're thinking that in this segment some hazardous situations can we improve as it will be.
Speaker Change: Pushing a lot of 18 months sugarcane that was blended less a year. So the situation in the second semester should improve of course depend on the on the weather from now on.
Renato Junqueira: So, the situation in the second semester should improve, of course, depending on the weather from now on. So, if you consider all those factors, we have sugarcane to crush something close to 13 million tons of sugarcane. The problem is that we are going to have a very slow beginning.
Speaker Change: No.
Speaker Change: If you consider all those factors, we hedged sugar cane to crush.
Speaker Change: Something close to 13 million tons of sugarcane, the product Thats, where we are which will have a very low beginning sourcing the challenger youll be the crushing pace from the April to December.
Renato Junqueira: So, I think the challenge will be the crushing pace from April to December. And regarding the 30-party sugarcane question, half of the 30-party sugarcane is contracted, is a recurrent sugarcane, so we will be crushing this year as well. The other half was an opportunistic acquisition that we did last year from mills that have industrial problems in our region, so they were not able to crush the total sugarcane that they had. But we believe that in normal weather this year, we don't need to acquire additional sugarcane. We have our own sugarcane to be crushed, but if the weather deteriorates, we will always be looking at the best alternative to maximize our crushing.
Speaker Change: And regarding to the third party sugarcane question.
Speaker Change: First off the third party sugarcane.
Speaker Change: As contracted as a recurrence Robert J, so it will be crushing.
Speaker Change: This year.
Speaker Change: Well the other half was an opportunistic acquisition that we did last year from a minerals that have industrial problems in our region. So they were not able to push the total sugarcane that they had.
Speaker Change: But we believe that considering normal weather. This year, we are not we don't mutual acquired additional special Greg can we have our all sugarcane shall be crushed.
Speaker Change: But if you don't have to deteriorate as we will always be looking at the best alternatives to maximize our crushing.
Renato Junqueira: In the first quarter that we need more sugarcane, we don't have 30-party sugarcane to be acquired.
Speaker Change: During the first quarter that we need the Marshal Greg Ken We don't have third party sugarcane to be acquired them.
Renato Junqueira: Thank you, Renato.
Renato: Thank you Renato just to complement as.
Mariano Bosch: Just to complement, as Emilio was saying at the beginning, we've been having in the last 18 months 30% less rain than average, so the climate is playing, or the dry weather is playing against the overall availability of cane, just to summarize what Renato just expressed in all details.
Renato: I mean, you're saying at the beginning we've been having in the last 18 months.
Speaker Change: 30% less rain down average so.
Climate is playing or their dry weather is playing against the overall availability of Kate just to summarize what I did not adjust the expressed in our DPP.
Emilio Gnecco: Then going to the second part of your first question, sorry, Emilio will comment on this.
Speaker Change: And then going to the second part of your question I'm sorry.
Speaker Change: <unk> comment on this.
Emilio Gnecco: Yeah, Matheus, thank you for your question and I apologize, but the company does not intend to comment further on market speculation or disclose any development. until it otherwise seems further disclosure is appropriate or required. There's no assurance that we will reach to definitely agreements or complete a transaction. Nevertheless, we continue operating under absolute normal conditions and always focus on delivering results and creating value to our shareholders.
Speaker Change: Thank you. Thank you for for your question.
And I apologize, but the company does not intend to comment further on market speculation or disclose any developments.
Speaker Change: Until otherwise.
Speaker Change: Otherwise deems further disclosure is appropriate or required.
Speaker Change: There is no assurance that we will reach two definitely agreements are complete that transaction.
Speaker Change: Nevertheless, we continue operating under absolute normal conditions, and always focus on delivering results and creating value to our shareholders.
Operator: Okay, thanks for the question. 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 poll for questions.
Speaker Change: Okay. Thanks for the questions.
Speaker Change: Okay.
Once again, if you have a question. Please write it down into Q&A section or click on raise hand for audio questions.
Speaker Change: Please hold while we poll for questions.
Isabella Simonato: Our next question comes from Isabella Simonato with Bank of America. Hi, good morning, everyone. Thank you for taking my question. I wanted to follow up a little bit on the dynamics of prices of sugar and ethanol, but more specifically on ethanol, because you guys mentioned in the release, you believe parity will go back to 70%. If you could just elaborate a little bit more on which context and timing for that. And if it's mostly due to the fact that Brazil will crush less, maximize sugar, but I mean, how you guys are looking to the supply and demand of ethanol since we haven't seen the parity reaching that level for more than a year now.
Speaker Change: Our next question comes from Isabella <unk> with Bank of America.
Hi, Good morning, everyone. Thank you for taking my question I wanted to follow up a little bit on the dynamics of prices of sugar naphtha, but more specifically on ethanol because you guys mentioned in the release.
You believe parity will go back to 70% if you could.
Speaker Change: Just elaborate like elaborate a little bit more on which context and timing for that and if it's mostly due to the fact that Brazil will crush slash maximize sugar, but I mean, how you guys are looking to the supply and demand of ethanol, we haven't seen the parity reaching that level.
Speaker Change: For more than a year now.
Isabella Simonato: Thank you. Thank you, Isabella.
Speaker Change: Thank you Shari.
Renato Junqueira: Renato will comment on this question.
Speaker Change: So not only comment on this question.
Renato Junqueira: Hi, Isabella. The demand for ethanol is still very high. So the monthly demand for ethanol is three billion liters of ethanol. If you take only hydros, it's close to two billion liters of hydros. The part of the pumps is still faring ethanol, but it's almost at 70 percent. Today it's at 68 percent. The current inventories are sufficient to 1.8 months of consumption compared to 2.2 months last year in the same period. So the situation is tighter. Other consequences, price are higher year over year. If you take in reais terms, it's 32 percent higher than the same period of last year.
Speaker Change: Hi, Isabella.
Demand for ethanol is still very high so that the monthly demand for ethanol is 3 billion liters of ethanol strategically OLED hydro's disclosed with 2 billion liters of hydro's dip the buyer to the pumps is still favoring ethanol, but is almost at 70% today.
Speaker Change: Is <unk>, 6% to 8%.
Speaker Change: The inventories are sufficient to one eight months of consumption compared to 2.2 months last year in the same periods. So the situation is is tighter.
Speaker Change: As a consequence price.
Speaker Change: Higher year over year is particularly.
Speaker Change: Terms, you started 4% higher than the same period of last year and depending on the delay in the new crop.
Renato Junqueira: And depending on the delay in the new crop, it seems that it's going to be difficult to have a high crushing volumes in March. I think the price can go even higher and surpass the 70 percent parity. So our strategy now is to keep selling our ethanol at current price, which is which is good. We expect to sell everything that we have in our tanks by the end of the first quarter. And just remember that we are still producing ethanol because of the continuous harvest production model. We are we are having a less intensive quarter in terms of of crushing, but it's still crushing and producing ethanol.
Speaker Change: It seems that this winter will be difficult to have a.
Speaker Change: Hi, crushing volumes in March I think the price can go even higher and surplus surpass the 70%.
Speaker Change: So our strategy is always to keep selling our ethanol corn price, which is which is good.
Speaker Change: We expect to sell everything that we have in our thanks by the end of the first quarter and just to remember that's where we are still producing ethanol because of the continuous harvest production module.
Speaker Change: We're having a lagging days of quarter in terms of offer crushing but theres still.
Speaker Change: The corrosion and producing ethanol.
Isabella Simonato: But I mean, when we look at the beginning of the season right now in April and May, do you think this is still possible? I mean, the disparity holds on, even given the seasonality and the fact that we have a big concentration of ethanol production in the short term. I think the fact that the next center-south crop should be smaller and more sugar oriented, I think the consensus is that the center-south crop is going to be 600 million tons with 52% sugar mix. If you take into account, it's reduced 2.7 billion liters of ethanol if you compare it to last year.
Speaker Change: But I mean, when we look at the beginning of the season right now we need pro.
Speaker Change: <unk> do you think this is still possible.
Speaker Change: Charity holds on.
Speaker Change: Even given the seasonality and the fact that we have a big concentration of ethanol production in the in the short term.
Speaker Change: I think the fact that the next center yourself crop to be smaller and more sugar oriented.
Speaker Change: I think the consensus.
Speaker Change: The central soft crop is going to be 600 million tons, we've shipped to 2%.
Speaker Change: <unk> mix.
Speaker Change: Into accounts.
Speaker Change: Reduced $2 7 billion liters of ethanol, if you compare to last year.
Renato Junqueira: And then we have the increase in the blend that should be announced soon, which adds 1 billion liters of ethanol in demand, plus the auto cycle. So if you take it all into consideration, this is much more important than the increase of the supply that came from the corn ethanol, which is approximately 1.5 billion liters. So I think the scenario for ethanol for next season is very positive, and I think the parity rate should be higher than the ones that we saw last year.
Speaker Change: In January we have been increasing in the plant that should be announced soon which should add more 1 billion liters of ethanol in demand.
Speaker Change: The Otto cycle. So if you take it all equals to date in Asia. This is much more important than the inquiries of the supplier that came for the corn ethanol, which was approximately $1 5 billion liters. So I think the scenario for ethanol.
Speaker Change: Next season is very.
Speaker Change: Positive.
Speaker Change: And I think the buyer to rates should be higher than than there was that we saw last year.
Mariano Bosch: Isabella, but having said this, we are selling, as Renato said before, we are selling the current stocks, all our current stocks are being sold now. So in the middle of the season, the price will probably go down comparing to today. But in average, we are expecting what Renato just explained very clearly. That's clear.
Speaker Change: <unk> had nice, but having said these we are selling us. Another said before we are selling the current starts all our current stocks are being solved now so in the middle of the season, the price would probably go down comparing to today, but in average we are expecting what renato.
Speaker Change: Capex play very clear.
Speaker Change: That's clear thank you.
Operator: Thank you.
Okay.
Larissa Pérez: Our next question comes from Larissa Perez with J.P. Morgan. Thank you for taking my question.
Speaker Change: Our next question comes from <unk> <unk> with J P. Morgan.
Speaker Change: Okay.
Thank you for taking my question I would like to ask Renato if he could give us some car on Haiti expectations of margins on the sugar and ethanol Division 2025.
Renato Junqueira: I'd like to ask Renato if he could give us some color on his expectations of margins on the Sugar National Division 2025, especially if he could elaborate a bit more on key cost components beyond sugarcane. That would be great. Thank you. RENATO Hi Larissa, we think that the production costs should be very similar to the one that we had last year in real terms. If you consider in dollar terms, I think it's going to be a bit lower than it was last year, I'd say 5% lower. I think there are some components that are slightly increasing and others that are slightly decreasing.
Speaker Change: Especially if you could elaborate a bit more on key cost components be on sugarcane now would be great. Thank you.
Speaker Change: Okay.
No.
Speaker Change: Hi, Laurie.
Speaker Change: We think that the production cost should be very similar so they wanted to have lesser year.
Speaker Change: All the terms.
Speaker Change: Consider that in dollar terms I think is going to be.
Speaker Change: Bit lower than it was last year, I'd say, 5% lower.
Speaker Change: I think there are some components that are in slightly inquiries and order desert areas utilizing decreasing that changed our lots of very relevant I would say that the labor is going to inquiries accord insurer touring infill.
Renato Junqueira: The changes are not very relevant. I'd say that the labor is going to increase according to inflation, leasing is going to, the consequent part of the leasing is going to increase as a consequence of better ethanol price. But on the other hand, there are some crop protection inputs that are decreasing. So if you take the balance of everything, it should be similar in reais and a bit lower in dollar terms. That's clear, thank you.
Speaker Change: Inflation.
Speaker Change: Leasing is going through the concept kind of part of the leasing is going to increase as a consequence of better ethanol.
Speaker Change: Price, but in the other hand, there are some crop protection inputs that are decreasing so.
Speaker Change: The bottoms of averaging should be similar to <unk> and bit lowering in dollar terms.
Speaker Change: Okay.
Speaker Change: Okay. That's clear thank you.
Operator: 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 poll for questions.
Speaker Change: Once again, if you have a question. Please write it down into Q&A section or click on res Hann for audio questions. Please.
Please hold while we poll for questions.
Julia Rizzo: Our next question comes from Julia Rizzo with Morgan Stanley.
Speaker Change: Our next question comes from Sheila <unk> with Morgan Stanley.
Julia Rizzo: Hello, good morning. Thank you for taking my question. I would like to make a follow up on Larissa's question on the production cost. This year was a meaningful decline, and one of the reasons you mentioned in your initial comments was the higher sales of ethanol would have some tax credits. Is it can you elaborate a little bit further? Is that that production cost was made because you sold a lot of ethanol? It was made with a combined production because you were holding them for your selling a lot. But how would be the production cost with the tax credits like normalized for the production mix?
Hello. Good morning. Thank you for taking my question I would like to make a follow up on <unk> question on the production cost.
Speaker Change: This year what was that.
Speaker Change: A meaningful decline in one of the reasons you mentioned.
Speaker Change: In your initial comments was the.
Speaker Change: Higher sales of ethanol.
Speaker Change: With perhaps some tax credits.
Speaker Change: Is it.
Speaker Change: Can you.
Speaker Change: So there is that.
<unk> cost was made because you sold a lot of ethanol is made with.
Speaker Change: The combined production, because we're holding even far you're selling a lot.
Speaker Change: How would be the production cost with tax credits like normalize it for the production mix.
Renato Junqueira: Is that my clear with my question to make the idea is to understand what would be the recurring. production cost with the mix of 52% sugar and 48 ethanol. Thank you, Julia, for your question. Renato, do you want to answer? Hi, Julia. If I understood correctly your question, I'm not sure if I got your point, but the mix of this year should be similar to the mix of last year because we are still maximizing sugar. So, we expect a mix close to 52%. So, we don't see a change in the tax credits affecting our costs.
Speaker Change: Is that clear with my question Jamaica. The idea is to understand what will be the recurring.
Speaker Change: Uh huh.
Speaker Change: Production costs with.
Speaker Change: That makes up 52% sugar and 48 ethanol.
Speaker Change: Okay.
For your question <unk>.
Speaker Change: Do you want.
Speaker Change: To answer.
Speaker Change: If I understood correctly your question.
Speaker Change: I'm not sure if I got your point, but.
Speaker Change: The mix of this year should be similar to the mix of last year, because we are still maximizing sugar. So we expect a mix closer to 52%. So we don't see change.
In the.
Speaker Change: Tax credits.
Affecting our cost so.
Renato Junqueira: So, considering this scenario, if it's a similar mix in tax, cost in reais is going to be similar and in dollar a bit lower than last year. Yeah, okay, so I think you answered my question. My question is that, more related, how you manage to calculate your production costs if you get the credits? Taking into consideration the amount of the volumes that you sell during the year, because sometimes you have some inventories carry over from one year to the other, or if you take into consideration how much of ethanol you produce? No, no, the ethanol that we sell during the year.
Speaker Change: Considering this.
Speaker Change: Similar mix and tax.
Speaker Change: Cost in <unk> is going to be.
Speaker Change: Similar in dollar a bit lower than last year.
Speaker Change: Yeah, Okay. So I think that you're answering my question My question is that.
Speaker Change: Formulated how have you managed to calculate your production cost is that you get the credits.
Speaker Change: Taking into consideration the amount of volumes that you sell during the year, because sometimes youll have some inventories carryover foreign yesterday, either or you should take into consideration how much of <unk> <unk> per dose.
Speaker Change: I noticed that we sale during the year.
Renato Junqueira: That's the way that we do the calculation. Okay, so you sold more ethanol in 2024, a lot more than in 2025, right? Yes. Because you were holding inventories. That kind of helped. And for the next year, you expect to sell the same amount of ethanol? I think it's going to be about the same amount, but we have to wait to see the dynamics of the market. Okay, thank you.
Speaker Change: The way that we do the calculation okay. So I guess you sold more ethanol.
24, a lot more than 2025 right.
Speaker Change: We're holding inventories that's kind of.
Speaker Change: Uh huh.
Speaker Change: For the next year, you expect to sell the same amount of ethanol.
Speaker Change: I think it is going to be about the same amount, but we have to true true HFC. The dynamic is.
Speaker Change: All of the markets.
Okay. Thank you.
Renato Junqueira: And also on the production cost, I have a follow up, because one of the things that I noticed was an expansion in the harvest area, and also in the expansion area. For a long time, I wasn't seeing you growing like this. Can you go over a little bit of how are the costs of those expansions, in terms of leases, agriculture, and in connection to that, what is the outlook for CAPEX for this? As we were able to lease some strategic farms in our region, that we improve our average distance, the distance from the sugar cane to the meal, the average of the soil quality, and also the topography of the areas, so very strategic farms. Those farms were farms that they have a higher quality, so we need to put less inputs.
And also on the production cost.
Speaker Change: I have a follow up because one of the things that I noticed was that expansion into harvest area.
Speaker Change: And also in the expansion area for a long time that wasn't seen you growing like this.
Speaker Change: Can you go over a little bit of.
Speaker Change: Are the costs of those expansion leases.
Speaker Change: Culture.
Speaker Change: And.
Speaker Change: In connection to that what is the outlook for Capex for this year.
Speaker Change: As we were able to lease so let me start <unk> farms in our region that we improve our average dsos.
Speaker Change: The distance from the sugarcane to the new.
Speaker Change: Average the soil quality and also the topography of the areas so very strategic farms.
Those farms where farms.
Speaker Change: They have a higher quality, so we need to put less.
Speaker Change: Inputs.
Renato Junqueira: And now those farms used to be grains, so it's cheaper to plant sugar cane there. So we expect to have an improvement in our planting costs in the next years. That is going to reflect the planting of these areas. And so that's why we increased the expansion planting. Regarding the replanting, despite the dry weather that negatively impacted sugar cane use, the status of our sugar cane was very good in terms of nutrition, plague, and weed control. So there are some areas that we thought that would be good to put some more fertilizer and have another harvest, because the weather was very bad.
Speaker Change: And all those farms used to be grains. So it's cheaper to plant sugarcane. There. So we expect to have.
Speaker Change: Improvements in our <unk> cost in the next two.
Speaker Change: Yes that is going to be reflect the planting of both of these areas.
Speaker Change: And so that's why we increased the expansion.
Speaker Change: Planting.
Speaker Change: Regarding the replanting.
Speaker Change: Despite the dry weather that negatively impact the sugarcane yields they start to swap off our sugarcane was very good in terms of nutrition play again with control. So there are some areas that we felt that would be good to put some more fertilizer and have another harvest.
Speaker Change: Got it.
Speaker Change: The weather was very bad, but the treatment of the sugarcane was good. So there's the sugarcane conditions are okay of course at the needs water. So thats why we decided to two three of those artisan.
Renato Junqueira: But the treatment of the sugar cane was good, so the sugar cane conditions are OK. Of course, it needs water. So that's why we decided to treat those areas and crush it again. But what was the plantation cost of the expansion cost of this new area and the outlook for CAPEX given the increase in the area and how can we translate that in milling? The planting cost of those areas in this region is about R$13,000 per hectare, which I would say is like 15% lower than areas that we were leasing some years ago.
Speaker Change: Grocery Diana.
Speaker Change: What was the.
Speaker Change: Transportation cost of the expansion cost of this new era and the outlook for Capex given the increase in the area and how can we translate that in many.
Speaker Change: Okay.
Planting costs of those areas in this region is about 13000, AI spirit, Hector, which I would say is like 15% lower than the areas.
Speaker Change: We're leasing.
Speaker Change: Some years ago.
Operator: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. This does concludes the question and answer session. At this time I would like to turn the floor back to Mr. Bosch for any closing remarks.
Mariano Bosch: This does conclude the question and answer section.
Operator: At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks. I just want to thank you all for your continued support, and we hope to see you in our upcoming event. Thank you.
I just want to thank you all for your continued support and we hope to see you in our upcoming events.
Thank you. This concludes today's presentation you may disconnect at this time and have a nice day.
Operator: This concludes today's presentation. You may disconnect at this time and have a nice day. Goodbye!
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Good.