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

Good morning, everyone. I'm Santiago Donato, investor relations officer of Cresut, and I welcome you to the fiscal year 2023 results conference call. First of all, I would like to remind you that both audio and slideshow may be accessed through the company's investor relations website at www.cresut.com.ar by clicking on the banner webcast link. The following presentation and the earnings release are also available for download on the company website. After management remarks, there will be a question and answer session for analysts and investors. If you want to make a question, please use the chat. 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 Elstein, CEO.

Good morning, everyone. We are finishing our balance sheet of 2023. And we can see in this first page what happened in the mixed results that we had, combining sustained commodity prices, But after the second half, we began to see a drop on those. And cost pressure that last year we suffered mainly in fertilizers and in inputs, that affected mainly the margins, the operational margins of the company. And in the same time, there were some effects on climate that affected our production, mainly Argentina, but the rest of the region was affected too. Related to Argentina, everyone knows about the drought. that affected the country, but thanks, the company had a big diversification in areas. So because of that, Cresud was not affected as Argentina was. Argentina was mainly affected in the coal belt, but Cresud plants all over the country. So our yields were much less affected than the country. And at the same time, there were agro differentiated effects done by the government the government was giving some of the taxes and exports through prices. So finally the effect on Crescent was much lower than the rest of the country. Related to Brasilagro, Brasilagro this year had a record farm sales. So we are going to see for small pieces, we didn't sell the whole farm, so we're selling in pieces farms and having a very important result related to farmland sales. But in Brazil, we suffered the lower productive result in there because of prices, costs and some weather conditions affecting the main corn, soybeans and sugarcane. Related to acquisitions, this year we began to buy again. And in Argentina, we had the chance of buying a new property, 1,200 hectares close to El Tigre Farm. So this is good news for Argentina. Related to our investment in IRSA, we grew 3% of our stake in IRSA. And so we went from 53.9, close to 54, to close to 57%. and buying the shares of IRSA. At the same time, IRSA was really growing a lot its EBITDA, its office sales and the leverage of the company. So the company was really happy of buying more shares of a company that really was recovering. And we are going to see the results in a few pages later. Related dividends. We paid last year very good dividend yield, 9% and 2.2% of the stock shares that we were buying buyback shares. And now we are offering a new dividend proposal that will be 22,000 million pesos, sorry, and 3% of ISA shares that we are going to be trading in the new shareholder meeting of the 5th of October of next year. We can now move to the next page and see here the evolution of prices of soybean and corn and why we are speaking about the drop of the last second semester, that we are seeing this drop of not so relevant in the case of soybeans, 9%, but more relevant in the corn. And this is forecasting a new campaign that will be tougher in prices in these two commodities. But at the same time, we are forecasting a drop in the costs that it's going to have, I would say, more normal margins for farmers. Last year, they were affecting in the two higher prices by higher cost. We are now forecasting lower prices at much lower cost because of the drop of fertilizers and inputs mainly. This effect of Soybeans is, in the case of soybeans, it's being affected by some drought in the U.S. But the prices are, today the situation of America is more comfortable than it was. So between Argentina and Brazil, we are going to be harvesting more than 200 million, plus the 110 million of Brazil. the United States forecast, we are seeing a big offer coming and the man is not clear if it's going to keep growing as it was. So we can move now to the next page and we can see the evolution on our planted area. We had this year a record from our history of 283,000 hectares for plantation. We are thinking of growing for next campaign and we're going to see next quarter, but the company is intending to keep growing, reducing our list areas to third parties to not to be renting so much and to be planting more of those surfaces in our plantations. And so the company is intending that evolution of increasing the planted area through the whole region, the four countries. We can now move to next page, page number five, and we can see what happened in the yields for Cresud and comparing Cresud and Argentina. And we can see in the map, we see what happened in the Corn Belt, mainly the whole country was really in red. meaning that the drought was really severe. Something that I, in the company 30 years, I didn't see nothing comparable the 30 years, but this is a drought that I think is much more than the 30 years. It's more than a hundred years, the most severe drought of the country. we lost, the country lost 50% of the soybeans and 35% of the corn that was budget, that was forecast at the beginning of the plantation area time, 40% in wheat. So the combination of the on the winter and summer crops, so that all Argentina was affected, 40, 35, 50%, and Cresut was 30 to the 40 of the wheat, 18 to the 35 of the corn, 30 to the 50 of the soybeans, meaning diversification of regions works, And we had a bad year, if we can calculate these yields compared to budget, but finally, with the compensation that the government gave mainly in soybeans and finally in corn, the corn was later disbalanced, but it's going to come in the next balance sheet, because it was on July or August, so it didn't come on the numbers of June. But because of the combination of the two, our campaign, the seasonal campaign, not the 30th of June, but the real campaign, was really Very good, comparing to the drought that the country suffered. So Cresul kept majority of the soybean and the corn, and was finally finishing selling much better prices, so compensating majority of the drought effect. So diversification worked in the operational, not having the Argentina drop, and the prices compensated that, some of them on the next balance sheet on the 30th of September. And here we see that in pursuit yields, the corn was not very affected. 3% year to year in the soybean, yes. And this is a combination of the drought plus early frozen that we suffered in the 18th of February that made us majority of our second soybean and the first soybean to suffer the 30% drop is because of the combination of the drought plus the early frozen. we can now make move to next page and see the evolution on the tones and the crop uh comparing year to year we drop four percent in the whole region uh argentina this close to ten percent year to year so last year was not good argentina is coming from three years of drought and the good news are the El Niño is coming to Argentina slowly and this is making rain for the winter and now we have our winter more normal compared to last year conditions so we are now expecting the three years drought affecting the country to begin to correct so maybe this is a more normal year of yields and we can compare it and hear the crop yields of the whole region the corn was not really being affected in the whole region. The more affected was the soybean mainly because of Argentine effect. In the meat, there was not a big change, almost the same number of heads, a little more production. A portion of that was made by the feedlots, more than the production on farms. Farms were affected because of drought, so that made a lower productive cattle activity for this year because of more cost affected, but not having less production. And in the sugarcane, we saw the effect of lower yields and less area in Brazil mainly. So, the operational business of this year was not as good. The best, comparing to the forecast, was Argentina, but in Brazil, Bolivia and Paraguay, operational was much more affected because of prices, costs and yields. And the land, the real estate, was the portion of the business that was more active, mainly in Brazil, and I'm going to show you a little later. We can now move to page number seven, and here we see that in the record year of selling farms, but at the same time we compare what we began at the beginning of the year with 750,000 hectares of old land and long-term concessions, And because of the purchase of one farm in Mato Grosso, Brazil, and the recent purchase in Argentina, so 11,000 and 1,000 hectares combination of purchases, and the small portions of sales, 900, 2,000, 5,000, 4,000, finally, we finished the year almost with the same level, but having $122 million of sales on our pockets. We can now move to next page. And here we see these four cells. And the first one is in Paraguay. The other three small cell in Paraguay, $1.5 million. The other three portions of farms in Brazil having internal rate of return of 28, 42, 10, nine. So very important internal rate of returns. Look at the majority of the Yellow shows the gain, so cost on our book values is close to, is almost non-existent, but we see the mid-majority is a gain that each of these cells brings. So, and in each farm we show here that we have remaining hectares, so there are smaller cells comparing to what we have on our books. And in next page, number 9, we see the track record of the sales of last years from 2014 to now 2023, every year selling 2, 3, 4, 5 pieces per year. This year, this is 122, a little lower than the 134 record in the past in 2015. In that year, there was a combination of Argentina plus Brazil. This is mainly Brazil in this year. And we look at the record level when the price of the land is really very appreciated at the 8,000 value of Brazil. And in the right, we can see why we are very active on selling, because there was a big increase on the price of the land. In the right, we see the price of the United States, Corn Belt, all the Brazilian. The Argentinian is not reflecting because of the effects done in Argentina because of the gaps between the two dollars and taxes on exports. So we were very active selling farms in the part that we thought it was very smart to begin to sell and buy again. So again the company is always the combination of three activities operational, real estate and now we can move to next page the service company. The service company through two companies, FIO and Agrofi. Remembering we have 50% of FIO and 17% of Agrofi. In the case of FIO, that is our service company giving service to farmers outside the farm with inputs, outputs, brokerage, commercial advisor. And in here we see, what this company is making and the first graph shows what is the projection of tons the company is selling. This year we have dropped from the 6.6 million tons of last year to 5.3 of this year. But remember that Argentina almost lost half of their harvest. So, this 5.3 represents close to 8% of the market share of Argentine volume. So, our record, comparing the 2, 3, 4, 5, 6% market share we had in the past. This company is forecasting an EBITDA close to 25 million dollars, so shows a strength of this company that is not only doing this job in Argentina, now expanding its branches to the rest of the region, including Chile and Bolivia, Paraguay, and now FIO is going to launch its branch in Brazil too, called Pionji. To show the strength of this company, it went to the capital market, raised a bond at a zero interest rate for three years, and this company has two bonds and all the financing of this company is at zero. So this expansion is very well recognized on the market. From the other side, Agrofine. This is the e-commerce of the agriculture in the region. this company is still expanding on the region and it's burning money still not achieving the goal of not burning money but decreasing the burning money a lot the company has cash in its pocket and it's decreasing the burn rate up to the level because the financing of these companies is much tougher in the market so this company is adjusting the size of the of the company adjusting the the payroll mainly today the companies with the less employees that it had and it's finding the basis to using the cash the company raised in the past to survive and to go to be leading this industry that is delaying more than we expected the use of the digitalization for the selling of the inputs of agriculture and the company understanding that is delaying its spread rate to wait because this we think it's going to happen but not as fast as expected.

saying that i will now introduce mr santiago donato thank you alejandro uh well moving to this page here we can see the yes a lot of efforts and progress in our commitments that we assume in environmental, social and government fronts. We obtained the RTRS certification at El Tigre Farm located in La Pampa, Argentina. This year we certified more than 4,000 hectares 7,000 tons of soybean production for a period of five years. This is a very renowned certification in the agricultural sector and also very valued by the international market. It recognizes the company's commitment to comply with laws and good agricultural practices, the respect and relationship with local communities, and mainly the care for the environment on the production. On social, we had some other certifications. In Argentina, a wool certification in a farm, 8 de Julio, in the south of the country. And then Brasilagro as well is working a lot on ESG and certified its corn production this year. On the social side, on the social front, that we have it directly and through Fundación IRSA, we have done multiple initiatives, donations, and volunteering. with a focus on quality education or rural education. We work with more than 25 educational institutions throughout all the country, and we invested directly and through Fundación around 260 million pesos this year with more than 100 social actions benefiting more than 100,000 people. So we are putting a lot of effort on this. We'll keep working to make more progress on ESG following our vision of feeding the world from Latin America, meeting the world higher demand coming from the increase of population and the world food needs as well now. I will now give Matias for the financial, for IRSA, investment in IRSA and the financial chapter. Thank you, Santiago.

Good morning, everybody. So moving to page 12, we can see our investment in IRSA during the year. We increased our stake to 57% from 54% in the previous year. We saw a good opportunity to invest in IRSA shares. We can see some of the results of years. During the year, there was a very strong financial and operational performance, mainly in malls and in hotels. The tenant sales in our malls keep growing and keep increasing our occupancy. We reach 100% occupancy in the La Paulera building and the rentals in the office segment. So we are very happy with that. The hotels also shows a very good performance, surpassing the segment of offices. For the first time, the hotels is more representative than the office in terms of EBITDA. There was an increase in occupancy and performance. Also, IRSA were very active in the real estate, selling a lot, selling a lot of office floors for up to $163 million and acquiring as well some buildings for $7.8 million. All the refinancing process were concluded during the year. There was a significant leverage of up to 67% since 2020. So IRSA applied most of the disposals of offices to reduce debt. Then IRSA also was very active in the capital structure, buying back shares for up to 5 billion pesos It's a new program where it's invested around 40% of that during the year and also distributed a significant amount of dividends during the fiscal year. It was a dividend yield of 17%. Also, IRSA proposed to the next shareholders meeting to distribute a significant dividend of 64 billion pesos that will represent around a dividend yield of 15% according to the current prices. On the right side, we can see the evolution of the rental EBITDA. We surpassed pre-pandemic levels from 131 to 167. We can see here the evolution of the malls that is the most significant, and then the hotels is the other. So moving to our financial statement, here we have different drivers that affected the results during the year. First of all, I would like to mention on the macroeconomic side what happened with inflation and the valuation that has an impact on our financial statement. The inflation during this year accelerated, reaching levels of 116%. compared with 64% in the previous year. And when we analyze what happened with the FX devolution during the year, there was an evaluation of 105% on the official exchange rate and 31 last year. That means that during the year, the peso appreciated against the dollar 5% in the previous year was 20%. On the blue chip swap, the dollar MEP, Also, there was an appreciation of 2% during the year and 8% last year. That has an impact when we compare figures in dollar terms. So if we translate those dollars of the previous year into pesos and then express again, adjusted by inflation, that will increase the numbers of the last years in dollar terms. So that has an impact on the inflation. time to compare figures of the previous year with the current year. If we see the agricultural operational results, we see here a reduction of 85.9%. Some effects are not yet recognized in this year. For instance, the new dollar that the government put for the corn, is not reflected yet in our results. So that will reflect it in the next quarter. So that will increase a little the grain segment. But when we analyze, we can see a drop in most of the numbers, starting with the grains or in the farming, we see a reduction from a gain of 23 billion pesos to a loss of 7.8 billion pesos during this fiscal year. So if we see the grains, last year was an excellent campaign, excellent prices, lower cost, very good yields. During this fiscal year, as Alejandro mentioned, we have the drought in Argentina that affected significantly our yields. That was partially compensated by prices, not on the commodity side, but on the FX side. that they're going to put new effects for corn and soybean. So part is reflected already in our numbers, part will come in the next quarter. But the yields are lower this year, the costs are higher this year, and the price of commodities were lower than the previous year. That is the reason of the drop. In the sugarcane also, we are comparing with a record year in 2022. This year the prices were lower. Remember that the last year the prices of all the prices were record because of the war in Ukraine. So this year there was a reduction and also in Brazil the government put a lot of effort to reduce prices of fuel that affected also the segment of ethanol. In terms of surface was stable compared to the surface of sugarcane last year with this year, in terms of yield was a little drop, but mainly the results were affected by the higher cost and lower prices, as I just mentioned. The cattle segment we see a positive result in terms of production, but when we compare, when we analyze in pesos term, in real pesos terms, since the increasing prices were much lower than the inflation, in real terms, we recognize or we see this decline, but in terms of production was positive. Then, The other important effect during the year is the reduction in the farming sales segment. We see a drop of 47% from 19 billion pesos last year to 10 billion pesos this year. Although this year was record in terms of farm sales, we see this drop that is related to a decline in the receivable accounts that we have for all the past disposals since the price of the soybean declined and we have a bag of soybeans to collect, we see a drop on that. And then the lower results on some of the farms that we sold during the year. So going to the next page, because of all these drivers and on top of that, higher costs on some of the IRSA segments, basically in sales and development, and in the other segment where we have an increase on two drivers, one in salaries and board member fees, And in the other is related to a claim that we have in Israel, where USA make a provision of around $23 million. That is the drop on top of what I should explain on the farming side. This is leaving aside the fair value of investment properties. If we analyze what happened with the investment properties, we see a drop. This is more related to the macroeconomic drivers. If we measure our properties in dollar terms, The prices are stable, so should be no negative results. But since we are showing our results in pesos adjusted by inflation, we have this drop of 50 or loss of 51 billion pesos. Finally, on page 17, we have what happened on the net financial results where we have a gain during the year of 24.2 billion pesos compared with a higher gain last year of 47.3 billion pesos. Here we have two main effects. The first one is in the line one on the table below the graph, the net FX results where last year we have a gain of 63.5 billion pesos against 20 billion pesos this year. Remember that the appreciation of the peso was much higher last year. So all our dollar denominated debt was affected by that or benefits by that. The net interest went down to 18.9 billion pesos compared with 27 billion pesos last year. This is because of the deleverage of the group and also the fair value of the financial assets. This is the investment of our liquidity generated gains during the year of 8.7 billion pesos. Finally, another significant effect during the fiscal year was positive results on the income tax. During the year, there was a resolution from the Supreme Court allowing one company to adjust by inflation. the tax credits and the tax financial statement. This is something that we have been doing on the tax balance sheet, but not on our financial statement. And during the year, we decided to recognize this game because the Supreme Court is allowing the companies to do what we are doing. So we are recognizing that game. So finally, with all these results, the company is finishing the fiscal year with a net result positive of 75.3 billion pesos compared with 135 billion pesos last year. About our debt, the net debt. We finished the fiscal year with a net debt of $396 million. The last quarter, remember, that was $420 million, so we reduced a little our leverage. The next amortizations are distributed in the coming years, so we feel comfortable that the company can refinance the upcoming maturities without a major problem. The credit rating was updated by FIX, that is a subsidiary of FIX Ratings, from AA to AA+. About the capital structure, we have been acquiring shares in the market. We did, well, the board may approve a program of shares repurchased for 4 billion pesos. We just updated the maximum price to $9 per ADR or 720 pesos per share. The program, we already invested 3.1 billion pesos, so we can complete the program. There is around 900 million pesos more. And also we submit for approval to our shareholders meeting a distribution of up to 5.8 million shares. That is around 1% of our capital stock that will be distributed together with the dividend. About the dividend, the proposal during the year, we paid like, was like three, 12.6 that was a dividend yield of around 9%. Now we submitted to the shareholders meeting a new disposal for up to 22 billion pesos in cash, plus 3% of the shares of IRSA. So if the shareholders meeting approve, we will distribute around October or November this amount of money and shares. So with this, we finished the formal presentation. Now we will open the line to receive your questions.

Well, now it's time for the Q&A session. If you have a question, please use the chat. We are going to take the questions in the order we received them. Here we have the first question. What is the reason for distributing IRSA shares?

Well, every time that we analyze the dividends, we analyze our capital structure, the liquidity and upcoming amortization of debt and the upcoming capital expenditures that we have. So if we analyze what IRSA will distribute, IRSA for Cresud will distribute around 37 billion pesos. And we prefer during the year, since Cresud acquired shares of IRSA for this, I mentioned that we increased this 3% during the year. It's like we use cash for this 3%. And now we will receive from IRSA this 37 billion pesos. So it's like we are leaving the amount of money that Cresut invested for IRSA in cash, and we will use that cash to reduce debt. And since there was this increase in shares, we will distribute those shares for our investors. So that is the reason.

Next question. If you can give me some prospects on the future campaign in terms of size, prices, costs.

We are planning to increase, we are talking about six, 7% growth on area. decreasing the area that we are giving to third parts and increasing that for our own plantation. So we are going to look for a bigger campaign related to tons in the whole region. Related to prices, we are expecting a drop on prices compared to last year. It's because of what we spoke about the more normalization on the regional production and that is affecting prices and so but a big decrease on the costs this is a mainly fertilizers and inputs not in seeds so we are expecting a more normal margins than last year, better operational when we speak about next year will be a better operational than last year because we are forecasting that if the weather is normal, no? So having said that, prices on drop, cost in drop, yields recovering mainly in Argentina. And so this is what we are expecting on the operational for the four countries.

Next question. What is management's current expectation on the time when Cresud will exercise its IRSA warrants?

Well, the expiration of those warrants are in 2026. So we don't anticipate any reason why we will exercise those warrants before expiration. So No, we are not planning to exercise before that 2026.

Next question, if we can provide more details on the provision of legal proceedings in Israel.

Well, there was, during our investment in Israel, IRSA signed a commitment subject to different conditions, an injection of around two installments of $20 million that were subject to to different conditions. The company or IRSA understood that those conditions were not fulfilled and there was no guarantees at all to inject that money. On the other side, the claim is they think that we should invest in that money and that is the claim. Although the lawyers of IRSA feel comfortable about the claim, the board of directors decided to be conservative and generate the provision of the half of the claim for $20 million. And the claim is related to that. That is all explained in our 20F or in the documents of IRSA if you want to see higher details or deeper details of the claim.

One more question, do you plan to purchase further Argentine farmland?

Yes, we did some purchase and we are in the objective of rebalancing our portfolio in Argentina for our land. Yes, so it's our intention to keep buying in Argentina if we find the opportunities.

We give some minutes more for any additional question that you may have.

We, this year, instead of, we were able to buy something and we are going to keep doing those swaps of the land. This is what, it's our mission, no? It's to rebalance always our portfolio. So yes, for sure, we're going to try to do this in the four countries that we are. So if there are no more questions... There is one more.

Will the cash dividend be distributed as a lump sum?

It's not defined yet. The shareholders' meeting will decide all the details about the dividend. The proposal is to distribute up to 22 billion pesos, so that will be decided by the shareholders' meeting on the 5th of October.

With this, we conclude the presentation on the Q&A session. We thank you very much for having participated. And I will now turn back to Mr. Alejandro Elfdein, CEO, for his closing remarks.

We are closing a mixed year, I would say, but facing what we think a very good year for NEXT in growing area. And I think the expertise on the operation is maturing year to year. In some cases, we are seeing so good yields having drought affecting that makes us to be very optimistic in that operational and maturity of the company and increasing the size. Meantime, the real estate portfolio and the activity shows this fever the company likes to have where to the day we are ready for selling and buying again in another region. So we are expecting a very good and active new year related to real estate in the region and in the service too because the expansion on the service is going to rest of south america so yes we are very optimistic facing the next new year having a lot of uncertainty related to argentine this is a year of changes of election and probably a change big change on the rules and the economy so for sure this is going to affect our business in argentina that today is a portion but it's not all the activity of crescent on the region so So thank you everyone for this year that is finishing and let's see and let's keep thinking and working a lot. The next year is going to be better than this. Thank you very much and have a very good day.