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

Good afternoon, everyone. I'm Santiago Donato, investor relations officer of Cresud, and I welcome you to the third quarter of fiscal year 2025 results conference call. First of all, I would like to remind you that a replay of this webinar, the presentation and the earnings release will be available on our website at www.cresud.com.ar. 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 afternoon, everybody. Let's begin in page number two, the main events for the third quarter of this year. And we are in a good campaign, I would say, comparing to last year, it's a bigger campaign, bigger planted area comparing. And the main reason was the more leasing on the region in Argentina and in Brazil. And we expect to keep growing in leasing for next year too. Related to climate, it was an average good climate in the region. The only part that didn't receive good rain was mainly Argentina in the north and Paraguay. Paraguay as Argentina suffered some drought on the summer and that impacted the yields on the summer crops. In the rest were generally good weather conditions. Related to commodity prices and the input costs, we are seeing a stable, I would say, stable price time of mainly the soybean, some rebound in the corn, I will show you later, and the cost was stable too, and we are expecting a reduce in the next campaign on costs, We have seen something that is very important to Argentina, that is the removal of capital controls, that is reducing the gap of the two dollars that we had in the past, and we are going to see what important is the impact for the future for the Argentine results. related to brasilardo we are being in the middle of good productive results mainly in sugar cane that has much better yield and prices of last year and in the rest of the crops better in corn but worse mainly in soybeans and cotton And related to real estate in these first nine months, we are seeing only in the first quarter cells that they were small cells in Los Pozos and Alto Tapori in Brazil, but recently the last quarter, we didn't reflect any cell, but we are expecting for the next quarter, next, before the end of the year. We can move now to page number three, and here the evolution of planted area. In the country's comparison, Argentina still seeing the biggest of the region. Brazil keep growing, mainly leasing, as I said, Bolivia and Paraguay, and the breakdown of soybean 50%. 24% of corn, 9% of sugarcane. Sugarcane with these 27,000 hectares is really relevant in the time of the yields and the results, and wheat and others. And if you can move to next page, we can see in page number four, the recovery of the commodities and the inputs recovery in cost correction. Here we see in the evolution of soybean, prices of today are comparable to before COVID and adjusted by inflation are worse than before COVID. If you adjust prices of inflation today, what is at 10 in the past was more than 11. So we are below that, but these days we are seeing some beginning of the rebound on the price of the soybeans. And we can speak about what happened this weekend between China and U.S. And this is impacting the prices for commodities for sure. We are seeing because of two reasons. One is that tax reduction of the tariff went to 10% of China. And this is going to make, again, Chicago more relevant. And we are seeing today that rebound. And the bases are going to be affected too. Bases of South America that were very high are decreasing these days because of the more important price of Chicago game, more trading for the future related to US. But generally speaking, I think the impact of the weekend, it's going to affect oil, and the oil is very correlated to the commodities, and oil probably is affected because there are not more recession expecting for the world. The world was expecting a big reduction on sales on the old trading and probably after this weekend is going normalizing the markets of the world and probably affecting commodity prices and probably what i expect is rebound on commodities but less basis on south america than they were And in corn, there was a rebound through this year, and we are seeing a better yield and better margin to corn in South America because of this corn rebound of 38% of the last year. So, generally speaking, a better environment for commodities for the campaign. We can now move to the next page, in page number five, and here we can see the evolution on capital controls and FX convergence. I think this is the more relevant move for Argentina, and if I would have to speak about taxes on exports and caps on the dollars, I think it's more important the second. and the government announced a few days ago that there is for the future it's close to zero the gap today is two three percent but the official dollar is close to zero to the blue chip in argentina and this for farmers and always is good the example when at the price of 500 in us it was the soybean in the times of 17 per bushel, the price of the U.S. was 500. At the farmer at that time, in the combination of the 33 taxes on exports and the gap of the dollars, was collecting 170. Today, the farmer of Argentina is collecting 270. For next campaign, the prices are 290. So we are adjusting to the prices of the US. Today the gap is 26 percent, taxes on exports are reflecting 26, and the gap is close to zero. So this is very relevant to the prices of the commodities in Argentina and to the prices of the land of Argentina. If we move to next page, page number six, we see the climate conditions. The Argentina, today is in a very good shape. Today, for the winter, for next winter, we are going to plant everywhere because there was a big recovery in the humidity on the land in all the culvert of Argentina. but we suffered some droughts and distance of rains between the summer time, mainly the soybean and corn time, and we are seeing in some regions some losses that we have like more than 50% of the crop, and that affected a lot the hills of Salta and Paraguay. We are now in the middle of the harvest time. Brazil finished, but Argentina is in the 38, Bolivia 78, Paraguay just 12. But we see some damage, and we are forecasting damage mainly in these two places, north of Argentina and Paraguay, affecting the two main crops, soybean and corn. So when we are forecasting, we are affecting yields on these two. So the agriculture... season is not the best as expected because these two effects. The rest is almost normal. So we are expecting a more normal agriculture here. Very good in sugarcane, some good in corn, but less good in soybeans and cotton. And in wheat that we finished was good campaign, but not so good like last year. And if we move to next page, we can see what I'm saying. We are expecting a growth year to year, a forecast of increasing 23% yields in the region, between Argentina and the region. So a big impact. Remember, we were growing in size, but not so much. And the rest is because of recovery of the yields, more normal climate. and in sugarcane too, an increase in division in the yield and price in sugarcane. So we see that the evolution, operational evolution, there are some very good news related to sugarcane and the rest more mixed between what I said. And we see the crop yields that we are expecting. Argentina is expecting a 2% increase. Brazil, a 1% decrease in the soybeans. In Bolivia, a big decrease. And Paraguay, a decrease too, because last year was bad, but this year is bad again. So Paraguay is close to zero. Last year was very negative. We are expecting a close to zero in agriculture in Paraguay. And in corn, some effect too. We are seeing in Argentina a 14% increase compared to last year, 1% in Brazil. Bolivia is not recently in corn this year, and five tons in Paraguay, very good result in Paraguay related to corn. So we see mixed results related to agriculture this year, but increasing in size. Related to cattle, very good year, and this is very good news for Argentina, mainly Argentina. In cattle, it's only Argentina. We are close to 16,000 eggs, and we are seeing margins for the next nine months of $7 million, close to $7 million. seven million kilograms of production and this is a part of the country that is expanding and we were we can see the evolution of Argentina in the graph in the left that Argentina was at the lowest prices in the real dollar comparing to the rest of the region and today we are in a comparable price to Uruguay in higher price than Brazil and Paraguay so Argentina with higher volume more efficiency, more feedlots, more productivity, increasing the margin in cattle business, mainly in Argentina and now following in Paraguay too. Related to FIO, our stake in services, here we see the evolution of FIO, and we are forecasting more than 7 million tons for the year, 6.7% market share of Argentina, very big in EBITDA, this company is really, in all the services that we are doing, in acopio, in capital, in credits, in advisory, in specialities, So the company is for sure the largest broker of Argentina, and the expansion of Brazil is beginning to see some fruits. The first half of the year, we surpassed last year's numbers. We are more than doubling this year's numbers of last year. So this service company is not only confirming the size and the evolution in Argentina, but now making its new path in Brazil. So, saying that, I gave you some pictures of Argentina. I will now introduce Mattia Javidowski to talk about IRSA investment, where Presud owns 55% of the state.

Thank you, Alejandro. Good afternoon, everybody. So if we see the results of IRSA during this nine-month period, we achieved a profit of 35 billion pesos compared with a loss last year. If you remember, during the first six months, IRSA posted losses, and in this quarter, we revert those losses into profits. Major news about our mold segment, where we can see for the first time in the year an increase in tenant sales. We increased 13.4% our tenant sales compared with the previous year. Still below when we consider the accumulated nine months, 4.6% below last year, but with a trend that is a recovery. Out of the office portfolio, we maintain 100% occupancy and similar prices than last year. We saw a drop in the hotel segment because of the new macroeconomic situation of Argentina and prices. We are receiving less inflows of tourism to the country and that has an impact on occupancy in our hotels. About Ramblas del Plata, we are very happy with the progress of the commercialization. We already signed around 11 transactions, two are sales in cash and nine are swaps agreements, where IRSA will receive square meters in the future. And also, IRSA has important news about the debt that tapped the international capital market issuing a new note that expires in 2035. When we see the evolution of the rental-adjusted EBITDA, we can see that an increase to the previous year, but an increase in the shopping mall segment. In fact, we have a record high for the last 10 years in EBITDA in dollar terms for our mall segment. But if you jump to the financial results of Kresut, first to understand the figures, it's tough when you compare figures that are the main driver is dollars, like in Kresut, when you have to adjust that by inflation. So you have the pesos of last year adjusted by inflation that really inflate the number of the last year. It's like we have a dollar similar of a dollar of 100, sorry, 1,800 compared with the current 1,000. It's like when we convert the pesos, we are giving a 70% increase in pesos turned to the last year figures. Also, the evolution of the dollar, the appreciation of the peso, both in the official exchange rate and the blue-chip SWAT, will have an impact when we value the investment properties at fair value. If we move to page 13, we can see on the line of the operating results of Prezud what happened. We have a drop. 83% drop. Part of that is explained on what I just said about the dollar and re-expressing pesos of last year, dollars of last year in pesos, adjusted by inflation, but part are related to some drivers that I will mention. So regarding FIO, you can see a drop from 29.8 billion pesos to a loss of 19.9 billion pesos during this year. This is attributable to, first of all, some seasonality. Last year, you remember that we have special dollars for farming, so farmers tend to sell in advance production, so the brokerage activity of FIO that last year was more relevant for that will be compensated in the coming quarter. So as Alejandro mentioned the forecast of FIO this year is positive and if we see in the net income line of FIO is also positive because part of the revenues or part of the results are recognized below the operating line. About the grains, we have a drop also from last year, 21.6 billion pesos a loss of 5.4 billion pesos this year. Again, when Alejandro explained drivers on productivity will be positive when we compare with last year, part of the results will be reverted. Here we have some effects of valuing stock At the current numbers, also the projections at the beginning of the quarter were higher than what really was. So that generates a negative result during this quarter. About the sugar cane line, we see a positive evolution. We have higher prices, higher productivity that part are compensated with higher costs, but very positive numbers. The same with cattle. We have a higher production of cattle during this year compared with the previous year, 24% increase, and also higher prices, much higher than inflation. If we move to the next page, the The fair value of our investment properties is mainly related to IRSA. Last year, we have a loss of 588 billion pesos. This year, we still have a loss lower than last year. This is a non-cash effect that if we analyze values of the properties in dollar terms, we are maintaining the same dollars in offices and land bank. and have higher numbers in the shopping malls. But when we adjust by inflation and convert last year numbers into current numbers, that is the reason why we are posting losses. Finally, the net financial line, we see a positive number, 86.5 billion pesos compared with 145 billion pesos last year. Part of that is related to the net effects result that since we have an appreciation of the peso, all the dollar denominated debt when we convert into pesos that generated gains and also the fair value of our financial assets that also generate profits. With all these drivers we finished the nine month period with a gain of 57.9 million pesos compared with the loss of 39.9 billion pesos last year. Well, finally, about the debt, there are no major news here. The net debt remains at 300. There is a mistake there. When they said gross debt, 349 is net debt, 349.7. and the debt amortization scale that we have somewhere for the debt that expire in the next years. There was some major news about the credit rating that was an upgrade to AAA for both Cresud and IHRSA during February. So with this, we finished the formal presentation. Now we open the line for your questions.

Well, now is the time for the Q&A session. If you have a question, please use the chat. We will take the questions in the order we received them. Here we have the first question regarding dividends. If you are planning to distribute dividends this exercise?

The decision will be taken in October. So our shareholders meeting will be in October. We have to submit the proposal around September. So it's not decided yet. So I can't comment any more about that.

Good. Here a question regarding the swap transactions at ESI, if we can give a little bit more color on how it works, and what is the motivation for doing swap instead of developing?

We entered all the details about Ramblas in the webcast of IRSA, so if you want to enter in more detail, analysis about that. It's recorded and it's public in our website of IRSA. The motivation, just to comment two seconds about the motivation, is to give speed to the project. So we are giving land to the developers, the development will develop and pay us with square meters in the future. So it's a way for IHRSA to develop the project, give it speed and became a relevant neighborhood in the city without investing our own money. So that is the main philosophy behind the strategy, but you can enter much more details in the presentation of IHRSA or contact Santi for more information. Sure.

Here there is a question regarding investment in IRSA and what is Cresut's long-term intention with this ownership?

It's a controlling shareholder and we are not imagining any big change these days. So, but we... I don't know what else to say.

If you realize we invested more money in IRSA when IRSA did the capital increase in 2021. And also we did some acquisitions in the market. So we liked the position that we have. And I think we have some compliments between the agriculture activity and the activity of fears and all there are some hedge between the two.

These days, it's much better environment to the urban, where the yield, the EBITDA, and the farms are tougher because drop of prices. The rebound probably is coming, and maybe this is changing. We don't know. But really, it's the biggest asset of Crescent in size, for sure. And so it's relevant for Crescent, for sure. But we're not thinking on a big change in these days.

Here a question regarding a fee or the results so negative of fee. We can explain a little bit more. And if we can expect a dividend policy for the coming years. I imagine Chris would know in general.

And related to the EBITDA of FIO, it's very good. And Matthias will explain the operation and the financial part of the balance sheet. But the real budget control of the company, it's generating a very profitable EBITDA. To give you a cross number, it's $15 million. for the year that the company is expecting. So it really is in a very good shape and surpassing 7 million tons. It's the largest of the country, for sure, like a broker. And the brokerage is not only in outputs, but in inputs, in fertilizers, in herbicides, in consultancy. So the company intends to help farmers after production, not inside the farm, but when the output is ready, helps the farmer to... close the futures in Argentina and abroad. So the company is helping the servicing farmers in a much bigger volume than Cresud. Cresud was big at the beginning, but not today. It's not irrelevant, but close to irrelevant, the volume of Cresud. And in Brazil, it's copying the model and not arriving to the million tons still, but we expect to pass that. But in the balance sheet, and Matias is going to explain, what affected, and it's the main difference of the year, in the profit, in the operational profit of the year.

Yes, there's some effects. The first one is when we took the last year results, as I mentioned, if we have to re-express an activity that is dollar denominated into pesos and then those pesos as just by inflation those pesos to the current numbers that give you like a sense that the number of last year is much higher than it was, what really was. About this year, and also there's some seasonality that last year because of the government gave special dollars for farmers trying to incentivize that they liquidate the the grains and receive dollars, people tend to anticipate transactions and then generate more revenues at this moment of the year than in the current year. Also, when we analyze the balance sheet of the financial statement of FIO, the activity of FIO is sometimes they acquire the products from the farmers and do Derivatives transactions that the result of the derivative transaction is in the financial line. So sometimes you see the loss in there or the less profit in the revenues or the net on the operating result, but that will be compensated by derivatives that are below the line. So at the end of the year, as Alejandro showed in the presentation, we are anticipating or projecting more volume for this year compared with the previous year. And prices are higher prices than the previous year. So at the end of the year, in the next quarter, we should see positive numbers.

Good. Here we have some questions regarding real estate, farming real estate, given the ongoing policy changes in Argentina and financial stabilization. Are you seeing any meaningful improvements in farmland prices and do you intend to increase your pace of net investments in farmland in the country? And there is another one that is, do you plan to buy farmland in Argentina or do you see better investment opportunities through Brasilagro in Brazil?

uh there is relevant what the government is doing related to agriculture there are some critics that they didn't took they didn't take the tactics and experts still they made a small reduction today on the 30th of june there is a maybe a threat of coming back to the price, to the taxes they were before, so coming back from the 26 of soybean to the 33. But still the government insists that it's going to reduce, and she still talks about finishing directly taxes on exports, understanding that damage a lot the agribusiness, and it's true. But meantime, did the announcement of the only one dollar or close to one dollar that I think this is the biggest macro no for Argentina. And I think that it's going to explain why I'm so optimistic on the price of the land of Argentina. Argentina is connected to the price of the corn belt of US, that is the correlation. in 2012, 2013, and stayed almost at the same, at the 12, 13, 14, $15,000, the hectare of the coal belt. These days, we see some rebound in Argentina. They are speaking about 10, 20% beginning to increase the price of the land, but the guide to the price of the US or to Brazil is huge. So there is a big chance of that to reduce in the future. So I think there is a drop or small drop in the price of the land of US and Brazil, comparing to an increase because of the Argentine measures, so I'm optimistic, and we think we are going to buy some new pieces in Argentina. We have a big portion in Argentina, so the biggest portfolio of land that we have in size is Argentina, and we expect that to reevaluate, but we think we are going to be buying some assets in Argentina these days too, because of these macro situations. Related to Brazil, yes, we are looking for opportunities, mainly in debt situations, forced to sell, but the price of the land went very much up. So the opportunities in Brazil need to appear because of some crisis. In general, prices are high. So in these prices, you don't find, you don't see any rebound as we see in Argentina. That is probably more possible.

Two more on the financial front. If you sell farms, how would you use that? So capital allocation, would you buy back shares? You could invest into new farms, paying dividends. If you can give a little bit of color on capital allocation at Crescent. I know.

How do you get that in there? You're making the other... The question for you or all of the rest? I think I'm completing all of the rest. Depending on the situation, we are trying to swap farms that they are mature and to buy new ones that we think they have a very big room to appreciate. And the shares, as always, the share that is very cheap compared to net asset value we buy. And every time we plan, we launch a new plan and buy back shares or buy other shares. So reducing debt. And increasing irrigation, we are thinking on, in the case of cattle, we are trying to rotate more in the feedlot time that is more profitable and reducing the raising cattle time that is more long and less profitable. So selling, maybe raising and doing more fattening at the end on farms or feedlots. So yes, rotating the land to make profitable business in agriculture, you need to keep rotating. You have to give to the market what it's really looking and to buy what everyone is hating and to put it in production again and make, as we always look for it, more than 10% yield in the combination of the real estate, operational and service as we are.

Good. I will go with the last one. How do you expect to deal with the $200 million maturity next year? Do you plan to tap the local capital market, the international capital market?

What we have been doing in the last six months is taking advantage that there is more liquidity in dollar terms in Argentina. There are new credit lines from banks. uh, refinancing of export, uh, that are for short term. So probably when you see the, why we have the short-term debt, uh, so high, we increase that part because it's efficient in terms of cost. Um, but then, uh, yeah, typically we, we finance our operation. And when you see the debt structure is a combination between the bank debt and the capital market. The international capital market, probably you need more size to go. What we learned from IRISA is that investors want at least $300 million size. And Cresul, we don't need the $300 million. So probably will be more in the local market than in the international capital market. With this, I think we... I'm sorry. And also, something important is the warrant. We have a warrant outstanding that expired in February next year. Right. No, Cresud is February next year, and Cresud will receive that. That warrant is deep in the money, so it's very likely that we will receive proceeds from the warrant. Considering the warrant of Cresud and the warrant of IRSA that Cresud has, probably Cresud will receive around $27 million inflow in that moment.

Perfect. With this, we finish the presentation and the Q&A. Thank you for joining. I will now turn back to Alejandro for his final remarks.

We are waiting for the last quarter, and there we are going to close some grains, soybean and corn, some cotton. And we have a very good position in the region, in the four countries, and we are very optimistic on the sector. And after this news of this weekend, the trading normalization is really relevant. We need economies to keep growing. And every growth goes to better food consumption to the population that's keeping growing. So we are optimistic on the business for the next quarter and for the longer term. So thank you very much. And we see you on October, September, October, closing the annual balance sheet. Thanks a lot.