Cresud S.A.C.I.F. y A.

Good morning, everyone. I'm Santiago Donato, Investor Relations Officer of Cresud, and I welcome you to the second quarter 2023 results conference call. Thank you very much. Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risk and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's earnings release regarding forward-looking statements. I will now turn the call over to Mr. Alejandro Elsteng, CEO. Please go ahead, sir.

Good morning, everybody. We are beginning today our second quarter 2023 results. I'm going to begin on page number two, talking about the main highlights for this half year. We are achieving a record planting area in the region and we began to include in our performance the farms that we own and we are leasing to third parties. What does it mean? Some farms, own farms that we rent, sometimes to generate a client to sell, sometimes directly to share the risk of production in the area. And that's the reason that in the next page we're going to see that we are achieving close to 290,000 hectares of total land in the combination of leasing and owning land. About the campaign progress, there are mixed conditions, and we are going to see depending countries and crops, but in general, there is a sustained commodity price, and for this campaign, affecting a very important growing cost, more affecting in the case of Brazil than in Argentina, but affecting margins, so we are going to see good and sustained commodity prices, but this growing cost taking a great portion of those margins of comparing to last year. And that's why Matthias later will explain some of the lower margins on the first semester that is the least important in the number of crops. Majority comes in summer that would be reflected in the third and in the fourth quarter. And in the climate, climate is affecting mainly Argentina. We are going to see the effect of the drought in Argentina mainly, not affecting Brazil or not importantly in Bolivia and Paraguay, but this is really changing in the case of Argentina. But we were lucky about some of the impact came to some regions that we have few farms, not a lot. And so we are going to show you our map and our location of the farms. So that is affecting a little less in our case. Related to Brasilagro, Brasilagro has good grain results. So we are expecting very good in corn and soybeans, but was affected mainly in sugarcane. So when we are comparing our balance sheet, we are seeing much lower results coming from sugarcane. Last year, sugarcane had resulted in increasing in prices, very good yields, and lower costs. But this year, the three are affected negatively, so that is the main change, the adjusted beta for the year. And in the real estate, the second effect on the balance sheet, the last year, the first semester was mainly affected by very good real estate sales. A lot of sales done mainly in Brazil, all of them in Brazil. But this year, we are just looking at two small sales that I'm going to explain a little later. So the main two effects on the agriculture are related to sugarcane and real estate. Related to IRSA, we were buying more shares. So from this semester with six months, we're increasing our stake from close to 54% to close to 57% of IRSA. So IRSA had very good results this semester. The EBITDA is rebounding a lot and the leverage of the company is amazing. We are going to show you later. From dividends, we were receiving dividends from Brasilagro, from IRSA, from FIU. The company is really receiving from subsidiaries a lot and expecting to receive much more in the future because all of them are in very, very good shape. And we were buying back shares and we were paying dividends in the semester that we are going to show you later. So we can move now to page number three. Here we can see the evolution of the prices of the soybeans and corn. So there was a rebound recently affecting. And so that's why the reason I'm talking about better commodity prices is but on budget. They are not surpassing us like last year. The prices of the crops that you are receiving, they are close to the budget prices, not a gain. Last year, we had like 20, 30% gains on prices that this year we are not expecting. We are close to budget. But saying that the commodities are firm enough not reflecting the loss that Argentina had. And that main reason it is because Brazil had more than increased what Argentina lost. So the region balance is good. It's not good in Argentina, but having so much area planted in Brazil that there is not a lack of grace for the next campaign. And here we see our evolution, and we are showing, and you're beginning to see the 28,000 hectares are hectares that Cresur and Brasilago own, and we are listing to third parts. And for example, in Argentina, we have places in Los Pozos, in our farm in Salta, or in La Suiza, or in farm in Chaco, where we diversify our production risk, Or sometimes we are tempting to the client to lease for later selling. That's happened. We are doing that, for example, in Paraguay. We are leasing, and the one who bought Morotiji Porsche, the 500 hectares, is leasing on top of that some hectares of the farm. So really, it's a way of bringing clients to our big projects too. So we are achieving close to this 300,000. We had the expectation of keep growing on that number between the four countries, between ON and LIS. We can go now to page number four. And here we see the evolution of the drought in Argentina. And here we see the red showing big drought. On December, the drought was almost everywhere. But look at the yellow. And the yellow reflects our farms area. and where our plantations are owned and leased farms. So the points are showing our plantations. And let's see what happens currently two months later when the rains came, some of the rains came. So majority of our points are located in yellow to green areas, where the drought is not affecting so much. The worst of the drought came to the main corn belt, north of Buenos Aires or south of Santa Fe or east of Córdoba, southeast of Córdoba. But our majority of our points are really better located, and here we are expecting not to be affected as argentina is in argentina the comments are about 35 37 32 depending the source but really the big drop from the 49 million tons original and we are not expecting to be affected so much here we are forecasting like a 10 in soybeans or five percent in court is a little too early today we are we are not just having the real numbers but our areas are not so affected as the country so we are less negative than the now the searches are talking about the focus of argentina meaning that we are expecting for March and June results, our main for soybeans and corn, and let's see if rain keeps coming. There is not reserve. What we have in the land, almost none of the land has reserve, and sometimes the land has reserves. many millimeters that could give to the crop, it doesn't come the rain. This is not the case this year. So majority of the areas are needing the continuation of the rain for the future. But we are still optimistic on the campaign in Argentina and in the campaign on Brazil and the rest of South America is much better, probably not affected or not below budget, maybe up to budget because really rain came to the region. And in plantation, you can see in page number five, that plantation of the two soybeans is close to 100%. And in case of corn, there is some delay. But in Brazil, that is 29%. It's expecting the collection of these days and comes the Safrania corn that is coming soon. So we are expecting to plant this portion. The part that probably won't be planted will be the remaining in Paraguay that probably won't give us the opportunity. And in Argentina, we think that will be close to all being planted. So it's really, we are not expecting to be affecting big in either sowing part. So let's see what is the harvesting part for the future. And to finalize the What in this semester was not very active, that the real state showing these two cells were that they were done the first quarter. In the second, they are not new. The first two are one in Paraguay, small in 500 hectares. The second in In Brazil, 1,400 hectares. And no news for this first semester, but very optimistic in the second. A lot of activity. A lot of activity in Brazil, mainly, but liquidity on the farms is huge. But in Argentina, we are seeing some movements. So we are optimistic on the second semester in the activity of the real estate, for sure. So first was not very active, but we are expecting much more activity in the second. Saying that, I will give you now the word to Matias Javidowski, our CFO. Please, Matias.

Thank you, Alejandro. Good morning, everybody. We're going to page seven. We can see some of the results from our investment in IHRSA. It's important to mention that during the quarter, or during the semester, we bought shares in the market, so we increased our stake to 56.7%. So we increased by around 2.3% our stake in IHRSA. Some of the main important issues during the semester for IRSA, there was very strong operational and financial results. Levels of EBITDA increasing, surpassing pre-pandemic levels, increasing the margins during the, compared with the previous year, so very good margins. The occupancy of the last building that IHRSA developed today is 100% occupied. The hotels are generating a record. Also, IHRSA during the last quarter recently issue new notes in the local market, so with that IRSA solved all the issues with the debt and with the restrictions of the central bank and the lack of dollars, so now IRSA hasn't more any risk regarding its debt and we will see that there is a deleverage process that we started in 2020. Going to page 9 to understand some of the results during the semester, we need to understand what happened with inflation and devaluation. Inflation during the semester was 43%, and devaluation was 41%. It means that we have a real appreciation of the pace of 1% during the semester and 11% last year. that will have an impact on liabilities that all the dollar denominated liabilities will generate gains because of this and all the assets evaluated in dollar terms will generate losses. If we go to page 10 we can see there is a reduction in the adjusted EBITDA on our agricultural business Basically, during this semester, we have different effects. The main one is in the sugar cane. We can see a reduction from 9.3 billion pesos last year to a gain of 800 million pesos this year. Remember that last year, prices of the Sugar was very high and so that generated a record gain during the last year. Now prices reduced and also the climate conditions for the sugar basically in Brazil were not the best. So for that reason we are generating lower results in this semester. Grains also has a reduction from 1.9 billion pesos to 220 million pesos. Remember that that is still not the best part of the year, so only the wheat we have basically the width of their results during the semester. Last year was a very good year, this year with the drought that Alejandro mentioned, we suffer, we have an impact because of that, and this is the main reason why our results are decreasing compared with the previous year. in the cattle activity is more related to the inflation effects prices were flat in pesos or more or less flat in pesos and with the effect of the inflow when we have to express that in real terms it's generating losses and agricultural rent and services we have again because we we increase the size of our farms that were rented to two third parties The results of FIO is very good. We can see an increase of 116% from 1.8 billion pesos to 4 billion pesos during the year. Going to page 11, we can see on a consolidated basis the operating income reducing 44.3%. excluding the effect in the change in the fair value that is mainly related to our investment in IRSA. On the right side of the page, we can see the decrease from, again, of 44.7 billion pesos during the last year to 28.8. eight billion pesos loss during this year um this is related to to valuation of our investment properties that if we measure that in dollar terms are flat but when we have to express that in real pesos is generating losses Going to page 12, the net financial results, we can see again during this semester of 8.8 billion pesos compared with a gain of 16.2 billion pesos last year. Here it's important to measure two lines, the net interest that we can see a slight reduction But when we combine the two lines, the net interest together with the net effects results, part of the results are going in that line that is generating gains. So we can see an important reduction compared with the previous year that is related to our deleverage process in a consolidated basis. So when we put all these facts together, the net result this semester is again of 19.2 billion pesos compared with 74 billion pesos last year. There is a reduction. Most of that is related to the fair value of the investment properties. We can see in the next page the dividends that we collected from our subsidiaries during the fiscal year 2022. We received dividends for $40 million this semester. After that, we received a dividend of $34 million. 0.8 million dollars, 7.8 from IRSA, 24.5 from Brasilagro and 2.5 from FIO. And also Cresut distributed dividends in cash, a dividend yield of 3%, more or less 10 million dollars that we distributed during November. Page 14, we can see the debt amortization schedule and standalone. This is only Cresut. So there was a challenge last year to refinance a debt of $113 million at the Central Bank of Life to do that. So the exchange offer was very successful. It was around 90% acceptance. So there is still a small payment of $14.7 million that we have to do in the next days. But we believe that we will have access to pay that debt without any problem. Also, during December, there was a new issuance. We issued a $38.2 million dollar linked note with expiration in 2026 with amortizations in the three amortizations in month 36, 42, and the remaining at the end. The interest rate was zero, so this also reduced our cost of the debt in dollar terms. On a consolidated basis, we can see the net debt evolution with an important reduction since 2020 from almost $1.2 billion to $680 million and much more diversified in the next years, the expiration. So we are very happy with this evolution. Regarding the share buyback program, remember that we approved a buyback program of 4 billion pesos. From that, we executed around 32% of the plan, so we already bought buyback around 1% of the shares of the company. The investment was 1.3 billion pesos, so we will continue to execute our plan in the future. So with this, we finish the formal presentation. Now we open the line to receive your questions. Thank you very much.