Release Date: September 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Brasilagro - Cia Bras de Prop Agricolas (LND, Financial) reported a net revenue of BRL1.1 billion and a net profit of BRL227 million for the year.
- The company successfully sold a significant portion of Chaparral Farm, demonstrating resilience in the real estate market.
- Brasilagro implemented 600 hectares of irrigation with plans for an additional 900 hectares, enhancing farm stability.
- The company is diversifying its crop portfolio, moving beyond sugarcane and soybean to include cotton and other crops.
- Brasilagro maintains a strong financial position with a net debt that is effectively negative when considering receivables from farm sales.
Negative Points
- The company faced a challenging year with lower-than-expected operational EBITDA due to declining commodity prices.
- Soybean production was affected by adverse climate conditions, particularly in Paraguay, leading to lower yields.
- The price of sugarcane dropped significantly, impacting the company's margins and profitability.
- Brasilagro's operational EBITDA decreased from BRL190 million last year to BRL31 million this year.
- The company is cautious about purchasing new farms due to high land prices and is waiting for a potential drop in prices.
Q & A Highlights
Q: Can you explain the expected productivity growth for soybean and corn, considering climate normalization and land development?
A: Andre Guillaumon, CEO, explained that productivity gains are expected due to both climate normalization and land development. The climate is expected to be more neutral, which should improve productivity. Additionally, land development, particularly in areas like Mato Grosso, will contribute to increased productivity. The expected gains are approximately 40-45% from climate normalization and 40-45% from land maturity, with the remaining 10-15% from organic maturity of the company's areas.
Q: What are the main factors contributing to the drop in production costs for soybean and corn?
A: Andre Guillaumon, CEO, noted a 15-16% reduction in agrochemical prices and a decrease in fertilizer costs, particularly potassium. Seed prices have also dropped by 8-10%. These reductions are in dollar terms and contribute significantly to the overall cost decrease.
Q: How is the company addressing the risk of fires, especially given recent events in Sao Paulo?
A: Andre Guillaumon, CEO, detailed several measures, including equipping machines with fire suppression kits, increasing the number of water trucks, and using satellite monitoring to detect and respond to fires early. The company is also working on community awareness programs to prevent fires.
Q: What is the company's current hedge position for soybean and corn, and are there plans to increase it?
A: Andre Guillaumon, CEO, stated that the company has hedged 17-18% of its soybean production, primarily through derivatives. They are monitoring market conditions closely, including exchange rates and geopolitical factors, to decide on increasing the hedge.
Q: What are the company's plans for purchasing new farms, considering the recent sale of Chaparral Farm?
A: Andre Guillaumon, CEO, mentioned that the company is actively looking for opportunities to purchase farms, particularly those that can be quickly converted from pasture to arable land. However, they are waiting for land prices to decrease further before making significant acquisitions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
