Brasilagro Brazilian Agric Real Estate Co Sponsored ADR (Brazil)

Good morning.

We would like to begin our conference call for the earnings. of the full year 2022-2023, which ended on June 30. Thank you to all the participants. On our side, we have André Guillaumont, our chairman CEO, Gustavo Lopes, our CFO and investor relations director, and I am Ana Paula Zerbinati. I'm head of investor relations and capital markets. Today, we began the call at a different time. And also we have holidays tomorrow. And you have access to English version. We have simultaneous translation in progress in English. Please send your questions through the Zoom or at the end. So I would like to pass the floor to Andrei. And we'd like to begin our conference call. Thank you. Thank you, Ana. Thank you to all who are with us. And it's even looking like a TV show here, but excellent. It's very good to be here every quarter. Once again, we're with you. And to close the year, we will talk about the challenges we had during this year and the things that we did right, the things where we had problems. So it's good to see. So we want always to have transparency and we want to have your trust. And also here, bringing, as I always say, more and more trying to give you good information about agriculture. Now we have more companies doing a good job as we do and contributing to reduce the asymmetry in a sector that is so strong, so booming in Brazil. representing 27, 28% of the GDP of Brazil. And we have less than 10 companies in the stock market, listed in the stock market. So we want to take advantage of these opportunities with you. So going straight to the point, what we have in terms of highlights. First, financial highlights, the company, surpassed the net revenue of 1.4 billion reais, net profit 268.5 million, although we will tell you that yesterday I was talking to some people, this is the year of the X. Why? Because where we have the cost of formation, high cost and low sale price. I even gave an example. Cost of production of soybean is like a triangle. two three harvests ago it cost 3.8 now it's 5.2 went back to four so a triangle very high cost for soybean so it's a year where we had results that were affected by this we will see this in detail with gustavo what happened to our cost of products sold and the revenue of these products, but we haven't adjusted a bit to 534 million, an expressive result, now in terms of operations more than 2.3 million tons of production and here we have grain sugarcane and the highlight that we have for you we always say the company has the ability to combine operational strategies with real estate strategies and it was a year in terms of real estate very strong we had already said we had already said that we should we should sell more than buying due to the liquidity of the market so we sold more than 9 000 useful hectares so we want and there this is the challenge we sell arable land and we want to continue growing totaling these 9,000 hectares sold, 610 million reais in sales. These are expressive numbers, and I believe that you who are following us I know that you do market analysis. Always in the beginning, I used to hear, oh, it's difficult to model how much you sell. It's difficult for the NAV and more and more, this is happening in a recurring way. And I want to say that everyone knows that the company sells farms every year. Okay, next slide. Well, as we were talking about sales and here we brought all the sales during the year so a lot of activity this year so we begin with a sale in paraguay a small sale but i always say these this is only the beginning so we sold in paraguay 1.5 million dollars 868 total hectares, almost 500 useful hectares. Then we made a second sale, first in Paraguay, above 20%. Help me with the numbers, 27.9, 27.9. Rio do Meio, we made a big sale and here we have a combination acquisition and sale. We were able to have a 52.4% return, expressive profit short sales, short duration sales. Then we had also sales in Fazenda Jatoba, 121 million, 16%. And you may say, oh, André, you're showing an asset of 52 and 16. But look at the generation of value for the shareholders. Fazenda Jatoba has been with us for more than 17 years. Then it continues to delivering also profit around 16 percent we've seen partial sales and this year we divested totally this asset this farm and the company's ability to do two sales we had different environments in the farm so we tried to accommodate to get to our price that we wanted according to the company's council, so we did this in two sails. A small sail, which was kind of savanna with sand, and another sail, that sold the remaining remainder. The second was very expressive 410 million Reais with an average price of 790 bags. So we had areas with more than 1200 bags per harvest and areas with 900. So this reinforces our ability to make good capital allocations. So, in total, we sold more than 12,000 hectares, 9,000 useful, for 610 million reais, and four. In the last five years, you always hear me in the last five years we have had an average price of 269 million reais in sales so around 14.5 percent of tir so this shows the company's track record and the company's ability to say that yes we have this joint model impact of planting and also sale of plots of land. Well, here we have information for you. First, on the right, the graph at the top, 3.444 This was an external evaluation. You know that this is the value of our land. We use Deloitte as an outside company to evaluate. So we're comparing the evaluation made by Deloitte of our land in 2021, and the evaluation of Deloitte now. So, 3 million point 444, and the current evaluation by Deloitte once again, 3 million 560. But what happened in the in the meantime in 2020 the portfolio is the same from 2021 2023 so we had sale of farms so how did we make a good evaluation we excluded from 3.444 million the sales that happened from 2021 until now at at this value not at the sale value so the evaluation when we divested, 897. These are the sales. When you consider the the value 1 billion 341 million reais. So we sell in installments, there's the duration of the operation, but fundamentally, once again, I say we have been selling in a recurring way above the evaluation prices. When I say evaluation, we're very safe about what we're saying. Now, when we look at this new portfolio, 3,560, excluding 897, and adding the purchase of Panambi Farm, we have a variation of 26%. So this is, we see that our land appreciated. So looking at 2021 and 2023, we see the land appreciated. At the bottom, I always say that being transparent with you, no one here is paid for appraising or we are evaluated by the results. So we have a lot of accuracy in the evaluations and the graph at the bottom shows the green and yellow. Deloitte and our evaluation, the land evaluated by Deloitte and evaluated by us. We are always conservative. And this makes sense. You as an investor, you have to see, and conservative evaluation is much better. So here we have been conservative when we look at our evaluation versus the one by Deloitte. Our evaluation is 10% lower, and the graph actually the bubble on the left here in a conservative way we do this nav with our internal evaluation of the shares so it's good business for us and excellent to use evaluations from outside So you would have to add another 500 million reais between both of them, which is almost another five reais per share. So we're talking in a conservative way, a share being worth 37. And if you consider the shares evaluated by outside, you would have 42 reais per share.

Well.

We add value by transforming land into arable land. And we have been telling you what the company is doing in terms of new projects, especially involving technology. We'd like to celebrate that we have some farms that are connected, 100% connected with 4G technology in partnership with Telcos. we installed in some farms, and especially in this one, São José, 100% connected. So we are sure this will bring a great gain in efficiency for the whole sector. Embrapa, the research company, says that connectivity can really increase our agricultural GDP by 10%. Now, in terms of infrastructure, number two, we have made progress. I have mentioned to you an important project of irrigation in the state of Bahia, where we believe we can increase the multiples in some areas where we have climate risks. So we're intensifying, especially in Arrojadinho, this project involving irrigation. we put into operation the seed production unit in Chaparral Farm, this unit, and I believe that it will continue with this focus for the demand we have for seeds. We know that seeds is one of the inputs that had the highest increases in price. So we're looking, we have also biofarms. So we said maybe here we can have something that can help us in the results. The production of our own seeds. There is a challenge, you're producing seeds in Bahia and being consumed in another state. But since we have close to it, irrigation fields, we can have this flexibility of producing materials for the state of Mato Grosso. We have seeds planted in Bahia, but there's this possibility, this synergy between irrigated projects and seeds. This allows us to have materials to be planted in another state, Mato Grosso. Transformation of area was a core We have a picture where we're including another 3,800 hectares in Bahia and also 7,900 hectares being developed to arable land in the state of Mato Grosso. Well, here we have the challenge that I mentioned. the challenge of growing in area and at the same time selling farms. So here we have our projection of the harvest 2023-2024, although the company did during this year more than 9,000 hectares of land that were sold. Even with this, we see growth in the operation. And the graph on the side shows how the company is diversified, looking at different crops to add more value. So five years ago, if you looked at this, it was almost one crop. You had two colors. You had only sugarcane and soybean. And today we begin to see a graph that is totally different. We still have a lot of sugarcane and soybean, but we begin to see highlights of other crops. And the graph on the side, what is the objective? The company wants to be always in commodities, but we also want to take advantage of opportunities of different crops that may give us more margin or may supplement the use of that soil. I'll give you an example so you can understand. You plant soybean in Mato Grosso. Soybean in Mato Grosso you plant in September. You begin to harvest in January. The first harvest in Mato Grosso, then we plant cotton. If you plant cotton until January 20th, this is ideal for cotton in the winter crop. Then we begin to invert. and plant corn corn we also have a restricted window the ideal would be to plant until february 20th But what happens if you can't plant? So then we have some special crops. So in the areas where you planted soybean, in the winter crop, cotton and corn, you still have some time around 20, 25% of the service. Where are we using these areas with beans and the other crops and I would like to show to you this vision of using the land as best we can and the graph on the side is where we have the distribution of our land and our land and rented land. And the rented land gives us a stability in results, and our own land allows us to be more efficient in the cost of capital. So the company is not only a company that leases land, but the combination of our own land and leased land helps us, similar to the one. the least land in our own land is a win-win solution and the gains also come in efficient efficient more efficiency in our own land with a lower cost well here we have the numbers of the year soybean estimated between estimated and actual 218 000 tons actual 204 000 tons with a variance of six percent six percent less we had farms with a production higher than estimated but we were penalized in one business unit which is big which is the chaparral farm This year in Bahia, we had adverse conditions in some regions, not all of them, but we had a drought in Chaparral Farm. Corn, very close between estimate and actual winter crop, corn had an impact. You all followed that the harvest planting had difficulties, the planting phase. and also the winter crop when you have 20 percent in a winter crop where you have this window beans also we've had fluctuations because it comes after corn cotton a challenge as a company we have to improve cotton in our estimates and in the production there's a learning curve also the company is learning to plant cotton and also the winter crop for cotton so nine nine percent below in total nine percent below estimate and cotton was affected as soybean was affected in chaparral areas a very large company a very large farm and we have cotton that was affected a lot in chaparral farm well here we have a little about sugarcane and other activities sugarcane we have been telling you about this a drop in productivity especially in the region of Marinho, in the north of Brazil. Last year, we had fire in a business unit. Fire doesn't destroy sugarcane, but you have to change many things. You have to use it in a different way. So we had a drop in sugarcane, TCH of 84. Instead of 84, it went down to 74, the sugar index. okay well here the harvest is over harvest 22 23 we close with average currency of 547 chicago price of 1450 and what do we have ahead of us we have the harvest 23 24. here i'd like to make a comment we have part of this already sold at 1291 We're always selling when at the same time as we buy inputs like fertilizer and we have some operations through an accumulating operation. We have our feet on the ground. We're very cautious what we accumulated until now. So when you look at this, when you look at this number in the company, you have 25% of soybeans sold. But when we use the accumulation, we're over 50 of soybean sold. Corn, an enormous challenge this year. The companies, the producers will regulate the winter crop. The margins are very tight now. This is going to be a great challenge this year. Sugarcane, we are making progress with the harvest. There was a delay one semester in relation to the other. We had a delay. in general the other line that is important for us receivables from farms we monitor this and we have some details of how we're selling and the exchange rates and chicago price well here we have experts here Here we show the new normal. We've seen this important drop in the price of commodities. Then we had also a drop in costs. And those who work with agro and have never seen this, those who were in this business for 30, 40 years, knows that this is always happening. highs and lows in terms of prices. And the great challenge of the company is to be more efficient than the average because efficient companies will have more success. Well, as I said, we have a scenario of commodities with lower prices, but we saw also The cost also going down. And here I can say that I never saw this price drop at this speed. We had a peak because of the Ukraine price of fertilizer. We began with sanctions to Belarus and then we began to have price increases in fertilizers and then we had the Ukraine war. the company bought the whole sector paid more so we had a map of 900 and now we're talking now 500 so there was a price in the drop chloride Also, 1200 we didn't buy at the peak, but we paid 700 for chloride. Today it's already 600 and nitrogen with its ups and downs. And the graph on the right, how the company is positioned in nitrogen here. So it's not NPK. So this nitrogen is for the winter crop and cotton. Phosphate, we have bought almost everything. Chloride almost purchases done. And below that you see the exchange. Well, Gustavo, you have the floor to go into numbers, and then we will be back for the Q&A session. Thank you. Thank you, Andrei. Thank you very much to all those who are participating in our conference call. Let's see the main numbers. I believe it's... We'd like to remind you what Andrei showed in the last two slides. This drop... of prices, drop in prices. We'd like to highlight that in our case with sugarcane, we supply to the mills who work with ethanol. The price was influenced by government policies with ethanol that is sold in gas stations. So we will show the impact that we had with a higher price of seeds, fuel and fertilizer. So let's begin with a consolidated result of the quarter and 12 months. Reminding you that we go from June 1st to July 30th. The Q4 We're not going to go into too much detail, but especially the results as a result of the sale of farms that André showed. And the last two that we sold and we recorded in this quarter are having an impact on the results of this quarter. But looking at the main numbers in the 12 months, We can see here a net revenue, combined net revenue, real estate and operations, sale of farm and operations, R$ 1.3 billion, 9% less than in the previous year. This operational net revenue of R$ 903, we see 23%. lower revenue is influenced by more soybean. This is a strategy that we had adopted in 2022 to accelerate the sale of soybean so on june 30 we're expecting to have higher prices prices and exchange rate are influencing the price of soybean and also in decreasing the revenue from sugarcane due to the drop Last year we sold at 1.40 reais. This year, on average, we sold at 1.16. And the market sees in the last 2-3 months they were selling even below one real, the sugar cane. So a drop in the price of sugar cane and the impact of the quantity, as Andre mentioned, we have 18% sugarcane harvested, 18% less this year in sugarcane harvest, and this represented 120,000 tons, 8 or 9% of this value, of this amount. is due to delays in the harvest to rain we had excessive rainfall it began in may normally we we begin on april we had to begin in may to harvest sugar cane because of rainfall When we look at adjusted EBITDA, net revenue from real estate here, here we have the sale of Rio do Meio Farm, Alto Taquari Farm, Araucaria and Jaburandi, all the sales that Andrei mentioned. So adjusted EBITDA, total 533 million Reais in 2023, margin 39%, loss of 77, a loss of 77 million. Here we will show you some numbers that affect temporarily the results. financial expenses. So when we look at the managerial EBITDA, we make adjustments and this corrects the vision of the company's operational results. Total net profit here, you can see 48% less than the gross margin of last year. But when we look at the two years, we had a combination of this. In 2022, we had good results in real estate, but spectacular operational results too. So the combination of very high prices for sale and a low cost. And this year, we had an excellent performance in terms of sale of farms, but operations... were influenced by higher cost higher and lower prices and this explains the difference between one year and the other now going on to the next page here i'd like to show the main numbers of some crops we always say that we have two main products sugar cane and soybean these are the These are the engine of the generation of a bit of the results. But 22-23 harvest had this drop in price of commodities and premiums in the case of soybean. and climate problems that affected soybean and cotton, plus the high cost that we mentioned, price increases in fertilizer and seeds. So, this combination of factors, when we compare one year with the other, the impact on margin is very great, very high. In soybean, we see a price that drops 200 reais per ton, drop in price. Cost per ton increased by 400 reais and a smaller quantity sold. So last year we accelerated sales, this year we're holding on a little and you can see how the margins have dropped practically by half in soybean. When we compare one year with the other of the 400 billion Razovibita generated last year, so we see that most of this was soybean and today the impact was specially in soybean. Another important point we can mention is sugar cane. The price, we saw that it is dropping 40 reais per ton 22% less. As I mentioned, the price of sugar cane that we had last year, 40 and this year 16. And the cost per ton went up due to two factors. First, the price increase in fuel. Fuel is very important. In terms of cost, price increases in fertilizer. And here, while you produce more tons, you can dilute this cost. Since production dropped, this also had an impact, increasing the price by almost 40 reais per ton. So we see this drop. We're explaining... why this happened, these two effects. Other crops, corn is very similar. We had an important drop. We had also an impairment. We have prices dropped as I said in the last three four months but everything that was done was similar to last year although we had higher costs as you can see in reais per ton and cotton the great challenge last year we had planted with a good combination of prices, good and reasonable productivity. And this year in the state of Bahia, we had an impact due to a drought in February, and this gave us a negative result. We have the winter crop that we will harvest in Q1 next year, but we're not expecting to recover the negative results.

Next. Let me see.

Okay, there it is. Well, as I said, we see net profit. with the sale of farms, 77 million Reais, and adding interest, financial results, income tax depreciation, which is embedded in results. So, excluding all the biological effects and also the land that is being transformed, that is under transformation, and we include here some derivatives in the financial results, an adjusted EBITDA of 187 million Reais, last year 437, Last year, 437, and together with real estate, we have 533. Last year, we had 689,000, the last line adjusted a bit to total. So here we see the contribution of each activity. Sugarcane, as we showed, had 47 million Reais, very similar. To this, we have to include depreciation, but we see that normally it was 45, 44, 45 between soybean and sugarcane. This year, sugarcane with this combination. Less productivity and lower price and higher costs also had a smaller contribution in generating EBITDA for the company. On the next page, here, the company continues with a very healthy financial condition. We have debts, 554,000 Reais. The company's in a very healthy financial condition. We have a debt of 453,000 reais. Net debt, 60 million. when you have, you see here, the leverage, very low, and net asset value of the company, value of the properties, we're talking about 2% when we believe that we could have up to 30%. The debt is a low-priced debt, 92.60% of the CDI. We're very comfortable with the interest and also the maturity of the loans. We're working now with new financing projects for an important project that we want to continue and conclude with irrigation, 965 million Reais. And we have receivables from farms, present value 700 million Reais. and 1.2 thousand bags of soybean from Alto Taquari according as we as we transfer the property we announced the sale last year and we will deliver and receive in installments. So in terms of debt and cash, we're very comfortable, in a very comfortable position. On the next page, we see this is an excellent piece of news. We always say to our investors, especially in the long term. We have investors who did not receive dividends during some years. We were reinvesting the dividends to build the company with more than 700 million reais now in receivables from sale of farms and After deciding what we will invest, we have 140 million to invest this year. So we understood that we should continue paying good dividends. So we are now using 320 million Reais. We're awaiting approval from our council in October. assembly in October so we're giving a very very very good return if we look at the last five six years almost nine percent return every year average so we try to do this on a recurring basis and our business model shows that we had a different, we had a difficult year in operations, but we had the sale of farms and this allowed us to continue being constant in paying dividends. On the next page, here we see capital stock market, Here we see market cap $2.5 billion and LND $4.9 billion. Share price $24. In the US $4.95. And as we say, an excellent investment. It's an excellent time for more investments. Andrei mentioned that we include the sale of farms here in this. We understand that it makes sense to sell in this amount, 24 reais per share. it has a great potential to rise. Thank you. And now we'd like to begin the Q&A session. Thank you, Gustavo, Andrei. Now I'd like to pass the floor to Pedro Fonseca from XP. Good morning, Andrei, Gustavo, Ana. Thank you for the opportunity. I'd like to ask two questions. First, an update in the case of hedging. If Andrei can explain more the point that he mentioned. So, in terms of accumulation, you already sold 50% of the soybean. Can you give us more details about the sale and whether the rest... Because in hedging, you had 25% sold at 12.70. In the other 25%, was the price similar, 25.70? And what can we expect in terms of the hedging for the next quarters? And another point that I'd like to ask, when you told us about margin per crop, you had many non-recurring facts, both positive and negative. What can we expect? Do you believe things will go back to normal? What is the company's target for the main crops in terms of gross margin? Pedro, as always, very good questions. Well, first, the first question, hedging. So, an enormous challenge in the year. A lot of instability. We see a market that dropped. But we saw, for example, we had a drought in the US, then prices went up. So what do we feel about this? The market is very tight. Any piece of news, positive or negative, will cause great movements in this market. So what did we do in the past? We sold. because we had to buy inputs. So we made these sales at 12.7. The market was 11.8. So we used some sales strategies. Then we saw that the market was stagnated. So we began to accumulate 20%. This is an operation. that can double if you are selling above the ideal range we're considering here this if it doubles we would get to these numbers So when we accumulate, every day we look at the contracts and we're selling at 12.75, 12.75. So at 12.75, we're selling part of this and we still have a large part at the same time as we accumulate and also some sales, we're trying to capture Our vision in terms of the challenge, more than capturing Chicago at a good rate, although it's difficult, we have two great challenges in the sector this year. The exchange rate, dollars, you know that this affects a lot the company. has an average dollar of 5.40, 5.50 reais to a dollar, but the future is showing a drop in the exchange rate. We're seeing a lower exchange rate. And a great challenge for agriculture is basis. Last year, allowed the sale happened during the harvest and the discounts were high so we have to look also at structural changes so one thing is looking at last year so soybean went down to 130 people didn't want to sell and So there was this discount. And structurally, we're in South America producing 200 million tons and North America producing at 120. So we believe there will be a change in bases. We had positive bases. And I see a timid recovery in comparison with last year. So we will have a negative basis in South America as a whole. So that's the situation margin. We believe that when stability comes back, it'll go back to 2,500 as an average. You have more mature areas with margins around 3 and newer areas below 2500. We're working with this expectation of 2500 reais per hectare, which is a little above historical averages. If we use 4.9 as the exchange rate, $520 in margin, which is still a good margin. So this is in the case of soybean. In the case of sugar cane, there's a little more uncertainty because we work with with mills that produce ethanol we don't we don't sell for sugar we're seeing sugar prices 26 yesterday 26 47 in new york so these prices of sugar will will decrease the production of ethanol. And on the other hand, we see the conflict putting a lot of pressure on oil prices. I would wait for the second semester to see the prices of ethanol as a fuel, and this may help us to go back to 4,000 per hectare. Perfect, André. What we're estimating, 2,500 reais per hectare of soybean. As you mentioned, our challenge simulating different scenarios between 1,700 and 2,500 per hectare. And Sugarcane, we're thinking... We're working with an estimate of 4,000 reais per hectare. And the great challenge is corn, especially winter crop corn. With the uncertainty in the window for planting, we're seeing that today for exports, we have 38 reais per bag And if we estimate 110 bags, 100 bags, we're talking about 3,500, 3,600 reais per hectare. And today the cost of planting, especially nitrogen, is above this value. So if everything goes right, you would lose a little bit of money. We will replant. We will try to understand the impact of the winter crop with corn. We have some uncertainties, but soybean and sugarcane, we're working with these margins. Thank you. Very clear. Thank you. When we look at the purchase of nitrogen-based fertilizer, it's a little lower. Andrei mentioned this. And recently we saw a great spike in nitrogen. Do you see any risk with this input? Well, so... I talked about fertilizer. Nitrogen-based has its ups and downs. Ups and downs linked to the price of oil. And nitrogen, nitrogenated products, they are linked. The price is linked to... to the winter in the northern hemisphere when you have a cold winter you consume a lot of natural gas and you produce very little ammonia so to produce nitrogenated products so we have to understand All these changes that we're following, the price of nitrogen, the price apart from being linked to oil, it's also linked to the consumption of natural gas in the Northern hemisphere. If you have a less severe winter, there is more gas leftover for ammonia. And talking about climate from now to January, it's difficult we know that the forecasts have an accuracy of 15 days so so gustavo said correctly it's fundamental for companies like ours we capture real estate and operations results we have to be able of course we were going to plant, but we have to adjust the planting. So nitrogen is especially the effect, especially on the winter crop, because of this uncertainty And while we don't have a clear idea of the price of corn, you can buy nitrogenated. It can become expensive or cheap. We saw changes in corn seeds, but we haven't seen the other costs yet. We're always working with a winter crop that represents little in the company's result, but we're alert to try to capture and see when it makes sense today. It doesn't make sense to buy nitrogen fertilizer for winter crop. If we don't buy nitrogen, production will drop in the corn winter corn, And so you can also buy and not have a higher price. So we're trying to understand what will happen. Thank you, Andre, Gustavo, thank you. Thank you, Pedro. Now, Enrique, BTG Pactual. Good morning, Andre, Gustavo. Thank you for the questions. I have two questions. The first, I'd like to explore the guidance for 23-24, the yields. You see a recovery of productivity similar to the guidance of the previous year. And since it's an El Nino year, how are you calculating this risk in productivity in your guidance? For example, how do you see this? What are your plans for next year? And the second question concerning the price of land. Andrei mentioned that you have been a seller of land in the last few years and the results of the two previous years make this clear. I'd like to hear how you see this market, the price of land. We see that we had an appraisal, liquidity, begins to drop in the sale of land and the company is deleveraged allowing the company and with the drop and with the drop in fertilizer prices too so how do you believe you will position yourselves in the next cycle and maybe buy land thank you Thank you. Two questions. We could talk about this two hours. Well, first question based on, I would say the following. The company in producing its budgets, we use some criteria. I won't say that we're conservative, but we try to be on the safe side. First, the best sensitivity, we analyze the portfolio of the lands being planted, maturity of these areas, maturity time, and we prepare a curve. With this, I'm saying Chaparral that I mentioned suffered a lot in this harvest, Chaparral farm, the numbers are impacting the projection, the estimates of production for the next harvest. So answering your question, the way we analyze production model, the land and the averages in the last few years, include a downside in the guidance for productivity. Your second question, the price of land, we saw a stabilization, prices stabilized. When we look at Because the price of land depends on the number of bags of soybean that you produce per hectare. For example, a piece of land that was worth a thousand bags of soybean, Soybeans were, so the price today has dropped the price of soybean. So when we sell and when we buy, we're using a curve that is projected for the price of soybean. So imagine a farmer that sold at a thousand bags, but it's not, but it's, It's always in installments. And the way we capture these highs and lows is using a curve of prices in the future. Soybean was 180, but we did not use this price. We put 180 at the sale? Yes. when I can sell at this price. In the others, it converges to a curve, which in our case is $12 a bushel. So I see a stabilization in the price of land, and for companies like ours, It's almost a synonym of opportunity because we have capital to buy farm. So we have to make good deals as we have done. So this is an opportunity to buy land. But I say, we still have an agricultural sector that has high liquidity. And this high liquidity, as I said, you need four, five years to see a drop. So all tax issues, all of this helps Brazil to have an important liquidity. We should continue taking advantage of this liquidity and thinking of opportunities to buy. The year before last, we were able to buy, sell, lease. This year, we were not able to buy, but we sold. As I say, we try to be an anti-cyclical company, taking advantage of opportunities. Everything is very dynamic, so we have to be able to look at the details and capture opportunities. This is what we do. Very clear. Thank you. Thank you, Henrique. Now we have some questions in writing. I'll try to consolidate some. Some André already answered with Pedro and Enrique's questions. We could talk more about the cost of fertilizer with impact on margins. And the other question, the impact of productivity, El Nino, you just mentioned that, and how this can impact in the results of next year concerning price of fertilizer next year. Well, as we mentioned, we had an expressive drop. So let's calculate. We were talking about MAP. We're talking about MAP that the company bought. The company bought at 950. So today the company is buying at 550. So $400 in drop of the price of MAP. We're talking about a product that on average, sometimes you spend more, sometimes less, but on average, In the case of MAP, 200 kilograms per hectare fertilizer. So 400 times 0.2, $80 drop, $80 drop. When we look at chloride, very similar, 800 and a drop to 500, $300. and roughly 200, 230 kilograms if I put 200 times 360 plus 10%, 65. So the drop in the case of fertilizer, in the case of soybean, a drop of $80 per hectare in phosphate So you have a reduction in the total cost of $145 per hectare. $145 at 5, 145, let's say, almost 800 reais in margin recovery. That's the picture of next year. So we have 800 reais less to pay for fertilizer per hectare. So obviously some crops which are more intensive, the savings can be higher. Cotton, where apart from phosphates, potassium and nitrogen, or sugarcane, where you work with more fertilizer, the drops become even more important. So we had reductions in general, 600 to 800 reais per hectare and some others, even 900, 900 real drop in fertilizer cost. In this line, In this line, in relation to the cost, there's a question from Guilherme and Tiago concerning the cultures that we intend to introduce with higher margins in the next harvest. And Guilherme wants to know, in relation to mitigating costs, nitrogen. whether for example would it make sense for us to start also having chicken raising chickens first question this is a question that we also ask the managers of the units we are always looking to see how we can improve margins per hectare. It's very important to know that we need different crops. For this, we have to create also sale chance. For example, if you print 100,000 tons of soybean, It's okay. Now, when you begin to look at other crops, beans, the company has been planting almost 5,000 hectares of beans. If you put 10,000 hectares you're gonna have problems with the price and you need distribution channels. So answering your question, this includes a learning curve, not only the best way to produce, but there's a learning curve in opening channels for the sale. You have to open a channel, You need to be constant. This is a great problem in Brazil. You begin to export a different crop when the price is good, everyone plants, produce. When the price is bad, no one produces that crop and the people abroad who said, who thought they had a supplier, they lose a supplier. And the special crops is for this. So we're exporting beans. We're selling beans also to the domestic market. We have a partnership in sesame. And so the crops, the special crops have a challenge, which is the sale. Now the second question, raising, for example, not only chickens, it's having the capacity to enrich, for example, the product. You were talking about manure from chickens, fertilizer from chickens. So, yes, it's a very good idea, but you have a logistics issue. Organo-mineral fertilizers, like I said, we spend 400 kilograms of fertilizer when you use chemical... When you use organic fertilizer, you will use four or five times this. So the trend is to increase this type of fertilizer, but you have to be close. The great challenge is that normally the production from chicken are sold close to close to the production centers. So normally it's close to the large centers, which is so organo mineral fertilizers are depend on logistics. And maybe in your question, You could say, Andre, do you intend to work with this type of fertilizer? Yes. Some people are specialized in this. If we have the opportunity looking at logistics to use this, we will do it. But it's not our core business. It's a totally different market. We don't have expertise in this market. and it would be very expensive to learn how to work with poultry. Gustavo, the impact caused by the fair value of biological products input prices and their effect on the sale of land, because we had a strong impact on the prices. Well, I will try to comment. Three effects. The effect is 150 million Reais. The inventory of sugar cane that is growing. So what is the rule? You invest and on June 30, we had to estimate in the future how many tons we would produce, the price we had to estimate that we would have in the future and bring this to present value. So what would be the objective? If I were to sell the company, how much would they pay me to deliver this inventory that is growing, sugar cane that is growing? So on June 30th, we had part of the cost of fertilizer, and we had the price of fuel that was high, but we... We didn't know the price of sugar cane. It would be around 2,900 reais per cubic meter. September, the taxes go down, new policy for the price of fuel in the country. So what happened on June 30th? the value we had was 2,300 per cubic meter, 30% below the price. When you look forward, this difference between these estimates generated 65 million Reais. If you wish to have more details, you can talk to Anna. we have 65 million Reais expense and affecting our result. Every June 30, you have to take everything in inventory and you have to put this at the market value at that time. If this value is lower than the value you had recorded, you have to make an impairment. If next month it goes up once again, you will record at market value. This effect, especially in corn, was 47 million reais, and you can see this in the accounting. So there's no cash effect, these are estimates. So what happens to receivables from the sale of farms? We have all the receivables coming from the sale of farms and they are all indexed to the production of bags. So we have to look at the soybean, the production end, see it, the market value. If I had to sell it to a bank, how much would they pay? And everyone uses the exchange rate, the soybean to estimate the premium freight. And based on this, we'll give you the market price. So what happened between last year, since the market was up, It gave us a positive result. This year, it generated a negative result, 57 million reais. So, there are many effects that affect. There are even others, but the greatest impact are these. 150 million, there are estimates, and we have to follow this. Thank you, Gustavo. So there's a question from Julia from MyCap concerning total hectares sold. How much is productive land and the percentage of the portfolio? Well, as I say, we have some questions that we have to calculate on the spot. I will calculate this rapidly. Approximately, this sale represents 5% of the area in portfolio, and it represents 20 to 25% in the value of the portfolio. So, I'd like to highlight that these sales, most of them were made in the Midwest, where we have land that has appraised. We can't say, oh, you sold five. No, we also sold farms that have higher or lower lower sales the farms sold in general are worth more than the portfolio so rounding off five percent of the volume in the area and five percent of the portfolio remember that we said excluding the evaluation 897 000 And in sales, we sold 1.341 million, 1 billion, 341 million. So there's a difference with the duration and the price of the land. Thank you, André. Question from Douglas and for Gustavo. Why do you do the impairment in Agrofy and the amount of the impairment represents 100% of the company's share in the company? The reason for the impairment, it's a technology company that is pre-operational and we would not be able to maintain this amount invested i believe it was one million dollars one million dollars one hundred percent of impairment like we had in the previous case when When we have business plans and indicators, these expenses in technology, we use indicators, axes, but we were not able to defend this and we thought we had to be conservative. But this doesn't stop because If it becomes an operational company, we will return with these investments. Why are you proposing dividends higher than the profit? To keep on paying the amount last year. Wouldn't that be more conservative? or repurchase of shares, considering the NAV? Okay, dividends. Dividends first. The number 320, last year we had 520 because we had extraordinary results. So the number is 200 million less than last year. So how... Apart from the profit, the company has accumulated results. So when we, you can see this, when we add the profit of this year plus accumulated results, we have 621 million in accumulated profits that could be distributed. So what did we do here? Gustavo mentioned this. We analyzed our flow to avoid hurting the company's capacity to invest. So some people don't see this receivables from the sale of farm. We have more than 700 million reais as receivables from the sale of land. And in the next year, we should have around 200 million being paid from receivables. So cash has another 200 million to receive. There are new sales. We will continue to make new sales when we sell. It's not always 100% cash. We begin with 15, 20% as cash. we decided to pay more to shareholders. Because one thing is giving the money back to shareholders with dividends when interest rates are high. The difficult is to pay 500 million and the interest rate is 2. So today, with interest rates in the market, the shareholders who want to reinvest in the company to continue buying shares of the company. We believe it's good business. When you ask me the second question, why we repurchase of shares? One thing we have done all the time with you is to change the liquidity of the company. In the last few years, we changed the liquidity of the company in enormous way. Three, four years ago, we had between 15,000 and 20,000 shareholders, and now more than 125,000 shareholders, 127,000 shareholders. So, this gives us a lot of liquidity. This gives us a great capacity to take out loads. So the way we can give back to the shareholder, we have a comfortable cash position. We have a lot of receivables. We are a company that should sell more. But if we have an opportunity, I will be the first to buy. We're not going to lose an opportunity to buy. Oh, but the money that you have in cash is not enough for a large farm. The difference of 50 million more or less won't make a difference, I can tell you. So a large operation, we will go to the market and I'm sure that you will allow us if we need more money for a big acquisition. So that's the idea. To distribute right now what we have, in a company that is a seller that is selling more than buying. And this is true. So we hope that we will continue with this situation, maybe a better situation in the market to make new purchases. But this will not stop us from large purchases. And if we have this opportunity, we're going to use it. Okay, a question from Eduardo. We're running out of time. He asks about the sale of including the installments of land sold in the next semester. so gustavo you should clarify that we still have a sale to be recorded in accounting but maybe you can talk about these receivables how they are uh how they are accounted for okay Some sales that we will still recognize. 1.2 million bags. Hectors, the second part in Taquari Farm, the second sale. So how is this done? When we deliver, they will pay an installment, 25%. At that time, we price these 1.1 million bags of soybean. We look at the price at the time and all the installments due, we bring to present value with the price of market, market price for soybean, Chicago in dollars, premiums and freight. So all of this we calculate and we look at the cost and we recognize the results in the sale. After that, we will have the other installments and every quarter we receive installments And once again, we will calculate these prices and the variance will be in the financial result. So today, it's difficult to estimate this value, the results we will have. will be transferred until June 30, the last quarter of the next year, and another part, most of it during 2024 and some in the next two years. Very clear. adding to your answer, with the exception of the last sale, all the others have already been calculated, we already recognized the gains, and today they are at market value in our accounting. Now a challenge, the last question for André, otherwise we could stay all afternoon talking about this, Mateus Caetano, Wari Corretora, and also Tiago Lima. I'd like to understand more about possible future sales. Which farms could be sold? And how do you see the market looking at current prices of commodities? And Tiago, how do we see the price of commodities in the future? The million-dollar question. Okay, I don't have a crystal ball, but okay, let's answer. First, Matheus, sale. I always say all our farms are for sale. So everything is for sale. Our decision is based when we begin to understand that the profitability of this asset is dropping, not because of inefficiency, but due to land prices. You have a farm that became very expensive, and even if you produce 65 bags of soybean and also 100 bags of corn, when the prices drop, we divest, we sell. So we monitor profitability. If the ROA is high, if we know that it can go up, we wait. So this is the way we look and how we divest. The price of commodities is linked. We see a market that is under stress. We see the harvest in South America. There are uncertainties, El Nino. We've seen this year rainfall being different. So this is very positive for sugar cane. It's positive to begin to prepare the fertilizers and also to dilute the fertilizer. But you also have sometimes other problems, for example, when you have when rain comes before you have some pests so the numbers the initial numbers we are working with 155 160 million tons of The company will grow more than this because we have 10,000 hectares that we're going to begin to plant, land that was transformed, and the productivity is higher in the beginning. So I believe we will have a stabilization in the global inventories. the cost of capital is high, this should stabilize some prices, so it's a market that is under pressure on both sides, and also with geopolitical issues, so you have a lot of tension and We monitor this both in operations and also in the sale of farms. So if it makes sense, we do it. Thank you. Thank you for participating. We had a record number of participants. Shares are going up. Let's see if we have another 10% in the appraisal of the shares. Thank you, Andre, Gustavo. If there are more questions, myself and Camila Daisy are available to clarify any points. Thank you. And I'm going to pass the floor to Andre for his final comments, and then we close. Once again, thank you. We know you trust in the company's management. You trust in the challenges we have ahead of us. I'd like to thank you. The results are not the result of Andre or Gustavo or Ana. It's teamwork. Begins with strategy, approval from the council, everyone's work, dedication, and more and more. I believe we're preparing a company to continue successful. We look at sustainability. We take care of this how we should do it. Once again, last year, we received great place to work, one of the five best companies in agro to work. For me, this is sustainability. Sustainability of people is the... companies' capacity to retain talent. And this is a constant challenge in companies right now. So this reinforces our commitment as managers that we're trying to do our best and continue with sustainability. Thank you very much. Let's hope El Niño will come. in a more attenuated way to avoid hurting the northeast of the country and to bring us an excellent harvest so count on our good work our support if you have any clarifications if you need clarifications talk to our investor relations department we wish you a good weekend a long weekend because of the holiday. So let's all rest and let's come back on September 11th because we have a year with many challenges ahead of us. Thank you.