Brasilagro Brazilian Agric Real Estate Co Sponsored ADR (Brazil)

Good afternoon to all. We're here once again for the Earnings of Brasil Agro Q1 2022-2023. Just to clarify, For those who are beginning to follow us, the fiscal year goes from June to June every year. So today we will be talking about the first three months of the harvest 22-23. I have here Mr. Andre Guillemin, our CEO, and Gustavo Lopez, our CFO. Okay, you have the floor, Andre. Before that, I'd like to mention concerning Q&A. If you wish to ask a question, please raise your hand and we, if you want to send in writing the questions, I will read them here. And if you want to follow in English, we have simultaneous translation in the Lincoln Interpretation. Okay, Andre, you have the floor. Thank you, Ana Paula. Thank you, Gustavo. And I'd like to thank all the participants who are always with us following the results of the company, believing in the company. So this is Q1. We hope this year will be more calm than the previous two with pandemic restrictions, higher costs. It's a year. that is we're seeing this year as very positive for agro in brazil and as anna said it's our first quarter as i always say well there's a lot to see but we already see some trends and we will clarify this during our chat today so as always feel free to ask questions to participate this forum We want it to have participation. Okay, let's go to the presentation. This is the first highlight, the first slide. And as always, we have the highlights. We have financial highlights, operational, and real estate. In terms of finance, the company closes the quarter with 299.8 million reais, net profit 42 million. adjusted a bit of 107 million later on we will give you more details we know that last year we had spectacular results in terms of operations 1.7 million tons of sugarcane we began planting soybean we have 38 percent of soybean is already planted especially in matugroso and goyas the climate has been stable and in terms of real estate like we say our companies in the market were buying and selling all the time identifying business opportunities that will bring profitability for our investor so in this quarter we'd like we had two movements and so we had a purchase and a sale we purchased Fazenda Panambi later on we will give you more details and yesterday night we announced the first sale a fraction of our operation in Paraguay Well, let's talk about Panambi. Panambi is a farm in a very productive region in Mato Grosso. It is here 10.8 thousand hectares of which 5.4 thousand hectares are agricultural land. This area in the past five ten years ago they were planted then they transformed this into pasture it wasn't their main focus their focus was cattle raising and we acquired this real estate to transform all this area which is pasture into agricultural land it is it is a very good region with large producers and we believe it has a great potential for a second crop it's in a region that is very favorable 285.6 million reais and on the right we also made the first sale in paraguay we're very happy i remember here in this forum we announced in a timid way for example jatoba farm when we came to announce that we were selling the first 600 hectares of farm that had a large agricultural land and in paraguay it's not different we have an operation we've been there for five six years producing we had spectacular years we had three years with a drought that affected production but it shows that we have potential and here i reinforce some aspects we began planting cotton also in paraguay last year 800 hectares this year we increase we will increase cotton and the whole region is planting more cotton the group was one of the first we were one of the first to plant soybean now more than 80,000 hectares there was very little cotton in the next harvest Paraguay should have 15,000 hectares of cotton it's economically feasible we see here 1.5 million dollars and here we see a TIR of 27.9% and if we analyze this in Reais 42.2% return we're selling 500 useful hectares and it still has a lot of area to be sold and some part of this to be transformed still so this shows this shows that there is liquidity in this region and it shows the company is being efficient in capturing these profitabilities with these opportunities while here this is a backdrop gustavo will be talking about this we have been showing this graph we showed this graph on a larger scale in the past and now we reduced it so we began showing a picture in the short term soybean 176 now 184 I'd like to remind you that this is corn BMF corn So we began with 101, now 89, cotton, a crop that had a strong drop due to the scenario that you know very well, the possibility of a worldwide recession, interest rates, cattle raising, a little of the effect. linked to our exports to China and also the volume we believe that there the volume would be smaller we're talking about food soybean at a high price but the number the volume of confined cattle was high ethanol when we look back in the beginning of the pandemic. Here we see the numbers then during the year, 3,000. And more recently, we had an impact due to the changes, due to tax on gasoline. This removed a little bit competitiveness of ethanol, over the price of ethanol and thus this harvest will produce more sugar than ethanol.

This product suffered and consecana, the last line, due to the same reasons.

Well, one recurring question at the beginning of the war we have shown how we would deal with this issue and fertilizers were discussed in the media on television a country that has 27 percent of its gdp focused on agriculture needs fertilizer so during many calls we purchased fertilizer in advance we bought in advance the fertilizer so chloride we bought before the ukrainian war then there were the embargoes and we purchased phosphate fertilizers we bought later there was space we bought fertilizers and the price of fertilizer with phosphate continued to drop and nitrogenated you know it depends on the price of natural gas in europe's with ups and downs so when we look at the price here we see the average price So we had fertilizers at $1,350. Today, $675. And when we look at chloride, the same, $740 in the past. These historical prices normally are $390, $400. We bought at $700. We thought it was a good deal. And now we're seeing these prices dropping a lot. It's important to stress, as I said, we have a large volume of planted area. This began to be used in our areas in July when we began to use fertilizer and then plant the second crop. So we had a deadline to make decisions until July. also because of the volumes were large buyers 80 90 000 tons you can't buy this a week before so we bought in advance i would say that we made more better decisions than bad decisions there was a great uncertainty everyone bought so here you see the pie chart we have 91 already bought the inputs and we still have nine ten percent to be bought basically nitrogenated in the second campaign. When we say second campaign, we're talking about the second crop, winter crop, and also sugarcane in February, March. And the graph below shows the volume delivered. So we're considered not only with the fertilizer, but also the delivery. And more recently, delivery reached high volumes and we saw there were many problems with roads being blocked but i can tell you that 84 has been already delivered so we have no deficit in any unit all the units are planting in Shingu they finish planting the others are planting and they have their fertilizer guaranteed and it was a year with a lot of volatility and we always tried to have the best combination of revenue cost but there was this uncertainty with fertilizer well here as i always say Here we reinforce that we're diversifying this graph, shows our company geographic distribution. In agriculture, you have to diversify. This is very important. So when you have this diversity, you can attenuate also climate problems many times. We saw, for example, the costs in Mato Grosso, higher, and Maranhão, Bahia, an important advantage in terms of logistics in comparison with Mato Grosso. So, the acquisition of the new acquisition. We have some leasing contracts. The company was very efficient with its partnerships. We included areas in Xingu, Rio Preto, Regalito, 5,000 hectares. We diversified in a region in Mato Grosso to the west, Comodoro, other areas in Xingu too. so the company was very efficient as we always say the combination of our own land with leased land and the last the sale while here although in the last year you're talking about q1 but during the last year You know how the company was efficient in selling assets. So year after year, we're being able to grow the planted area. This is very important. It represents cash. stability in the operational result always trying to bring foreseeability for investors we know that this business has a lot of volatility agriculture has volatility how do we attenuate this volatility looking at the pie chart you can see the breakdown of crops where we have an enormous diversification of the portfolio soybean beans also here corn this and sugar cane and cotton so and the pie chart on the right shows our area that is cultivated with our own land leasing for our production so this balance is fundamental Our own real estate results and operational results, leased areas were always focused in being in stable areas. And the combination of these two strategies, the way we see it, is a winning strategy. Enabling important real estate gains and lowering the cost with leased land. and also giving us more stability in the results. So this strategy is strong inside the company and we're always calibrating this strategy, adapting it for it to be efficient.